It’s official: the European Central Bank has opted to hold interest rates steady while at the same time extending its lending to banks for another three months. While it’s what Europe needs, does it necessarily make Europe exchange traded funds (ETFs) an attractive buying opportunity?
The fact is that not all of Europe is in bad shape. In fact, Northern Europe is a standout on the continent, boasting a strong recovery, a much-improved stock market and stable debt markets. In the United Kingdom, manufacturing expanded at the fastest rate in 16 years last month.
It’s important to keep in mind, too, that in the European Union’s view, all countries are “too big to fail.” When push comes to shove, the EU doesn’t seem very keen to let any country default.
Investors would welcome a do-over of the buying opportunity presented in U.S. equities in 2009; Europe may be the do-over you’ve been waiting for.
SPDR DJ Euro STOXX 50 (NYSEArca: FEZ) is a good way to get exposure to Europe by owning the bluest of the blue chips. It’s also heavily weighted in two of the continent’s most solid economies: France (36.9%) and Germany (28.1%). FEZ is a hair below its long-term trend line, so keep an eye on this one as it gets closer. [Germany ETF Positioned for Growth.]
If you’re looking for a little more risk, consider iShares MSCI Spain (NYSEArca: EWP) or iShares MSCI Ireland (NYSEArca: EIRL). Spain and Ireland aren’t out of the woods yet – both economies may get worse before they get better. But as is often the case with the most beaten-down asset classes, they’ll rebound the most when a recovery takes place. [Ireland Could Bring Pain to Europe ETFs.]
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.