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Europe's great value worries

Article Abstract:

European stock prices have risen in early 1997 and there is a debate as to whether they are becoming expensive. Low inflation and low risk levels are one reason for a rise in share prices, and European corporate earnings may also grow strongly, helping stock prices. Corporate restructuring could also help earnings over the longer term and this in turn would boost share prices. There is still concern about weak economic activity and whether the rewards from restructuring have already been reaped.

Western Europe

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The clouds on Europe's investment horizon

Article Abstract:

European fund managers are optimistic about the performance of European stock markets since economic growth is expected to help boost profits. There could still be risks in the European market. Germany is seen as a key market and economic growth may not be as strong in Germany as forecast. German disposable income could drop in 1997, affecting consumer spending. Rising German exports may help boost economic growth, but too rapid growth would push up bond yields, affecting share prices.

Germany

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Europe, less bearish

Article Abstract:

European equities are less overvalued in Sep 1996 than they were in spring 1996, according to Lehman Brothers. Equities could still be affected by short-term developments such as a rise in bond yields and tight fiscal policies. Spanish shares offer especially good value and Swedish shares are also attractive. Swiss shares are expensive and Italian share prices could be affected by a rise in bond yields and concern about political uncertainty.

Europe

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