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Jul 28, 2010

Investment View - ING Investment Management favours UK and German equities in Europe

UK is at a very deep discount to the rest of Europe despite its global exposure

Relative performance of Germany will depend on risk appetite and sovereign debt issues

 

ING Investment Management’s (ING IM) recent economic research highlights the short to medium term benefits of investing in UK and German equities. ING IM says the UK equity market should not be at a 20% discount to Euroland and it expects this gap to narrow. It also believes that Germany will benefit from investors’ continued flight to safety over the rest of the Eurozone.

ING IM believes that the UK is an attractive market for several reasons: In mid-June the UK government delivered a tighter than expected budget. This budget was well received by the markets and within Europe the UK has gained some status as a safe haven.

From a valuation point of view the UK is one of the cheapest markets in the developed world. The risk premium is 6.0%, which is far above other markets. Also the dividend yield is attractive, even after the omission of the BP-dividend.

 

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Investment View - ING Investment Management favours UK and German equities in Europe

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