Investors don’t understand just how important China is for European stocks, asset manager says
Investors don’t seem to understand the importance of China’s economy for European stocks, particularly for Germany and Northern Europe, according to Philip Saunders, co-head of multi-asset at Investec Asset Management.
slew of fiscal and monetary stimulus measures implemented by Beijing in 2018 and the beginning of this year.
As a result of such policies, which are set to boost growth, Saunders expressed confidence that the “very unloved” European equity markets might well “be a significant beneficiary” of that change.
Moreover, Saunders said an increase in Chinese demand is likely to have a positive impact on Europe’s overall economy. China has been the second-largest trading partner for the European Union, contributing to 15.3 percent of the value of EU imports and exports in 2017, according to the European Commission.
Still, Saunders said, not all European equities are necessarily going to rise after Chinese domestic stimulus kicks in. Rather, companies with direct links to demand in China will be poised to benefit the most, he added.
In particular, he said: “Banks are very heavily beaten up and they could well surprise. So, for investors, basically, who missed out on this particular moving market, I think there may be opportunities to highlight areas that really haven’t responded adequately to all the changes.”
Among European Union nations, Germany was the largest exporter of goods to China (87 billion Euros) in 2017, according to the European Commission’s Eurostat.