One of the main reasons why European stocks suffer from a lack of interest in them is that investors prefer to channel their capital into shares in the technology sector and, in particular, in “millennials” companies. Those companies are mostly listed on Wall Street.
“It’s the cool tech stocks that Europe is lacking,” said Max Kettner, a cross-asset strategist at Commerzbank AG in London. “It’s tough to see Europe outperforming the U.S.”
Stocks of the Stoxx Europe 600 technology sector are only 4.7% compared to 26% of those in the SPX 500, and although European Tech shares have the biggest growth this year, their number is significantly lower than in the US.
This creates a prerequisite for investors to channel more capital to the US than in Europe. Further pressure on the European shares is also the political uncertainty created by Germany, Spain and Italy. Last price depreciation of the EUR is not in the right moment and makes previous investments in European stocks losers, while new purchases are not particularly logical in the face of political picture and uncertainty.
Source: Bloomberg Finance L.P.
Chart: Used with permission of Bloomberg Finance L.P.
Trader Nikolay Georgiev