HSBC Positions Against European Stocks By

By Laura Sanchez – Investors should avoid betting on Europe in the hunt for value stocks, as the Old Continent’s energy crisis means the risk-reward is yet to come, says Willem Sels, global CIO of HSBC Private Banking and Wealth. Management.

The macroeconomic outlook in Europe is bleak as supply disruptions and the impact of Russia’s war in Ukraine on energy and food prices continue to pressure growth and force countries to tighten monetary policy aggressively. to control inflation.

By contrast, the US offers big-name growth stocks: companies that are expected to grow earnings at a faster rate than the industry average.

While Europe is a cheaper market than the US, Sels suggests that the spread between the two in terms of price-earnings ratios (company valuations based on their current share price relative to their earnings per share) “It does not compensate for the additional risk that the investor is taking,” says this expert in statements to CNBC.

Corporate earnings season will kick off next October, and the analyst consensus expects earnings cuts to be the predominant story around the world in the short term.

Central banks remain committed to raising interest rates to tackle inflation, despite acknowledging that this strategy could lead to economic conflict and possibly a recession.

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