Interactive Investor

Which stockmarket is up 40% already this year?

27th May 2015 15:10

Lee Wild from interactive investor

European equity markets have broken records in recent months, driven largely by loose monetary policy in the Eurozone, but also by a steadily improving economic outlook for the region. Deutsche Bank has identified the best and worst performing asset classes so far this year, and analysts there have given their take on where the hot money should be right now.

"In equities, upside in Europe seems now limited while a pullback in the US appears likely," says group chief economist David Folkerts-Landau. "We see more opportunities in stock-picking than in broad indices."

"Implied volatility in equity markets looks low relative to other asset classes, though this is not infrequent. We expect volatility spikes to continue to be short-lived."

However, Folkerts-Landau reckons equity markets are under-pricing risk relative to other asset classes. "Metrics in equity market may signal some level of complacency in light of uncertainties - e.g., European rates sell-off, effectiveness of ECB QE, Fed hikes, risk of Grexit and Brexit," he says.

Here's how the asset classes have performed so far in 2015:

(click to enlarge)

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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