Bloomberg.com is reporting that some portfolio managers are now eyeing Europe and Asia for additions to their equity portfolios, noting that both continents have many companies that are undervalued in economies which are steadily improving.
One such portfolio manager is Sarah Riopelle, senior portfolio manager at RBC Global Asset Management, who boosted her equity allocation by two percentage points to 59 per cent over the past month. She favours European and Asian stocks over North American.
She noted valuations are very cheap and are reasonable within Europe and fundamentals seem to be improving.
Currently, the price-to-earnings ratios for European and Asian benchmark equity indexes are at 14.5 and 13.7 times respectively, compared with 16.2 for the US, reported Bloomberg.
This in addition to economic indicators, monetary stimulus and the steepening of yield curves are the incentives which portfolio managers are finding attractive.
Additionally, there are fewer concerns about the UK now with the increasing chance of an easier Brexit.
Bloomberg notes that portfolio flows to Asia ticked upwards in November, with higher equity inflows to the region’s emerging markets excluding China to about US$23 billion.