A strong euro has done little to slow global investors’ buying into European equities even as stocks become comparatively more pricey.
Fund managers report sustained confidence in the region, predicting the eurozone will move on from years of economic flat corporate profits to post a strident recovery. Stock indexes peaked at two-year highs earlier this year leading to some sell-offs through the summer but fund managers are now returning as they foresee better prospects going forward.
“The strengthening euro is a sign of improved confidence… The reality is that interest rates are going up because people are more confident and that’s a good thing…I used to own a lot of exporters but that’s changed,” said Bill Kennedy, Fund Manager at Fidelity said in comments to Reuters
Data from EPFR Global suggests redemptions from European stock funds reached six-month highs at the end of August when the euro peaked above US$1.20 for the first time in two and a half years.