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Investor Insights

Investor Insights

Eurozone | Monthly Report - August 2017


Executive summary

  • The eurozone growth outlook has improved and it should benefit from sustained worldwide activity and a more supportive policy mix.
  • Eurozone growth is expected to reach 2% in 2017 and stay close to 2% in 2018.
  • Inflation will probably remain moderate, close to 1.5% y/y in the second part of this year; a progressive recovery is expected in 2018.
  • The ECB is preparing financial markets for a progressive removal of its significant monetary support in 2018.
  • Political risks have receded after the French elections. The forthcoming German elections are not a major issue for markets, as Chancellor Merkel stays ahead in the polls.
  • A renewed European political project is expected after German elections thanks to a rejuvenated Franco-German political axis.
  • The progressive shift in ECB strategy should generate upward pressure on European bond yields and add volatility to asset classes.
  • We have moved back to overweight eurozone equities at the end of June with a tilt towards French equities and Small caps in EUR profiles.
  • The prospect of reforms in France and, potentially, in the broader eurozone improves the medium-term outlook for corporate earnings. Within the eurozone, we continue to favour the banking sector, which still trades at reasonable valuations while being an attractive play on the domestic recovery.
  • The EUR has strengthened on firmer growth and the prospect of a less accommodative ECB policy. Some retracement may be expected after this rebound.
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Michaël Lok
Group CIO and Co-CEO Asset Management

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Norman Villamin
CIO Private Banking

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Patrice Gautry
Chief Economist

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Investor Insights - Emerging Markets

Monthly Report | July 2017

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