Investors advised to buy European stock

Wed, 11 May 2005

Investors are being urged to consider investing in European stocks , despite the perceived weakness of many eurozone economies.

Chase de Vere Financial Solutions has pointed out that many of the apparent signs of weakness are the result of economic restructuring, which could well result in strong returns in the years to come.

"Investing in Europe seems a complete paradox. Corporate Europe has done well, even if GDP has not. Structural reforms and restricted domestic demand and wage growth look bad from a consumer point of view. But they've been good for businesses," explained Richard Batley, European economist at Schroders.

But even though eurozone GDP growth is 1.5 per cent, while the US and UK have rates of 2.6 per cent, this does not mean Europeanwill not perform.

Justine Fearns, research manager at Chase de Vere, noted: "Many people shy away from the European sector but there are many excellent funds available." She advised investors to make sure what it is your fund actually invests in, and cautioned investors not to place all their investments in Europe.

"The key is to create an asset mix that is in tune with your financial objectives and attitude to risk. At the moment, a balanced investor would be sensible to consider investing about five per cent of their portfolio in Europe Ex UK funds," she explained.

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