A plunge in the value of European equities has presented an opportunity for bargain-hunting investors to snap up stocks, a BlackRock investment chief said today.
In a note this morning, the fundamental equities team at the world’s largest asset manager said that European stocks had now priced in recessionary fears which made them a rosy option for investors looking for long term value.
“Near-term economic gloom is already reflected in stock prices, in our view – and in the valuation gap between European and U.S. stocks,” Nigel Bolton, co-CIO at BlackRock fundamental equities said.
“Europe’s reliance on Russian energy supply puts the region in a vulnerable position as war rages on. But European equity valuations are now below their long-term average […], whereas U.S. stocks appear far more expensive on a historical basis.”
Bolton added that European equities represent “good value for investors” looking to capitalise on recent market volatility.
The guidance runs counter to market trends in recent months as European investors pull cash from equity funds en masse.
Investors withdrew £6.9bn from UK equity funds in June as they look to shield themselves from extreme volatility sparked by war in Ukraine and recesionary fears, according to data from investment analytics firm Refinitiv.
Total outflows from funds hit £10.5bn last month, with £2.8bn from mutual funds and ETFs shedding £29m.