European shares rose for the fourth consecutive day yesterday, as bumper gains for asset managers benefiting from this year’s equity rally lifted financial stocks.
Fund managers and traders said that even if there was a near-term pull back, as some investors look to sell shares to book profits on this year’s rally, it would not be enough to prevent European equity markets from gradually rising higher over the course of the year.
The pan-European FTSEurofirst 300 index closed up 0.6 per cent at 1,192.87 points, pushing the index back towards a four-and-a-half year peak of 1,209.05 points reached last month.
The eurozone’s blue-chip Euro STOXX 50 advanced 0.5 per cent to 2,674.33 points. The FTSEurofirst 300 is now up five per cent so far this year, while the Euro STOXX 50 has risen around two per cent.
The STOXX Europe 600 Financial Services Index was the best-performing sector, as a 13 per cent surge in fund manager Ashmore on news it had drawn in more new client money than expected lifted other asset management stocks.
Jean-Luc Eyssautier, senior product specialist at Union Bancaire Privee (UBP) Investment Management, said equities remained well-placed for more gains, despite a weak economic outlook in Europe caused by the region’s sovereign debt crisis.
“We believe 2013 will be a bumpy year but one where ultimately equities should close higher,” he said.
A Reuters poll last month showed that fund managers and analysts expected the Euro STOXX 50 to rise to 2,935 points by the end of 2013.
While the majority of investors are bullish on equities as a global asset class, with stocks offering better returns than bonds and cash, some are more negative on European equities compared to US or Asian equities.
Japanese stocks have surged in recent weeks after fresh stimulus measures by the Bank of Japan and ING Investment Management strategist Patrick Moonen preferred Japan to Europe.
Moonen said European equities could underperform due to the region’s lingering debt crisis problems, as highlighted by Cyprus’s bailout, problems in Portugal with austerity measures and a political deadlock in Italy.
However, strategists at Societe Generale’s cross-asset research team expected the Italian deadlock to be resolved soon, and backed a trade to bet on gains on Italy’s FTSE MIB equity index while betting on a fall on Germany’s DAX. (Reuters)