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Europe To Outperform The US In 2005


Europe To Outperform The US In 2005

Leading investment manager Arcus expects European sharemarkets to show strong gains this year.

In its Quarterly Investment Review for clients of Spicers Wealth Management, Arcus sees sharemarkets in the United States taking stock after two years of exceptionally strong growth.

Arcus Chief Investment Officer Mark Brighouse says there will be significant shifts in the United States as financial services face competition with investment flowing back to manufacturing.

“While the recent strong growth in markets may not be sustained, we believe that future returns in the US will remain positive.”

Mr Brighouse says Europe appears to be in the early stages of a recovery.

“European equity markets suffered more than others in 2002 and early 2003 and are still more attractive on valuation measures than the US market. It is likely that corporate earnings growth rates for European countries will be higher than for US companies during 2005.”

Mr Brighouse says telcommunications and pharmaceuticals are the attractive sectors in the UK market.

While questions still hang over the Japanese market, Mr Brighouse says there is evidence from leading indicators that the slowdown late last year was a temporary weakness in four years of otherwise positive growth.

Elsewhere, emerging markets are experiencing strong growth, especially those whose exchange rate is pegged to the dollar, driven by strong demand from China.

Closer to home, Mr Brighouse sees Australia outperforming New Zealand.

“The Australian sharemarket has not experienced the same degree of multiple expansion as New Zealand and is beginning to look more attractive.”


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