Dear Members,
This is what we mentioned in “European sections” this year book “2015 Financial Predictions”:
EUROPEAN MARKETS
In the year 2014 the European markets traded mixed due to a slow recovery in the economy. Maria Draghi has used all the tools he can to stabilize the European economy and at this stage it still looks challenging. However, we are still optimistic about 2015 even though USA is still our favorite investment destination. Investing in Europe and losing value in currency terms may bring Net losses for international investors if they convert the money back from euro to their currency. Euro fell almost 13% in 2014 and none of the other European markets performed that well except for Switzerland. The astro chart of Europe and the EU looks mixed in 2015, but towards the end of the year some concerns will arise, and some conflict between the EU nations will take place, which may give an indication of the EU breaking up in the future coming time.
Spain, Italy and Greece still remain in the red zone so invest in these markets very cautiously. We do not expect any major disaster for the Euro zone in 2015, so buying on weakness in these markets should provide some good returns. To find these cycles one just has to follow the USA rising and falling cycles.
In 2015 the Euro uncertainty will continue but we still see a very positive trend in the US equity market so key European markets will follow the US market. I don’t have a clear answer as to how aggressively one should invest in the European market. A few people have asked me that “Mahendra, if S&P is going to 3200 then the European markets will follow S&P.” but I just don’t see this happening as I don't see any good astro cycle for Euro; all I see is euro constantly loosing value and eventually going to par value to dollar (which entails loosing 23% for current levels so even if the European market moves 23% higher, there will be no gains for international investors).
The real estate market will underperform in Europe but retailers, automobile, biotech and pharmaceutical sectors will do well so local investors can invest in these sectors. During 2015 DAX, CAC, FTSE, and the Swiss market will closely follow the USA market. Markets like Greece, Spain, Italy, Belgium, Hungry, Denmark, Ireland, Netherlands, Poland and Portugal will trade very volatile.
In the first quarter of 2015 we see Spain, Greece and Italy gaining value, but during the second quarter most of the European markets will fall. During the third quarter once again stability will come and the financial and banking sectors will start showing positive signs in Europe so we highly recommend investors to buy beaten banking stocks in countries like Greece, Spain and Italy. All leading European banks will underperform as compared to USA banks as US banks are out top picks in 2015.