European equity markets have lagged the U.S. for a lengthy stretch, but even amid potential Eurozone political volatility, some market observers believe Europe could be a desirable developed market destination this year.
Potential investors interested in gaining exposure to the European markets have a number of options available. For instance, the iShares MSCI EMU ETF (NYSEArca: EZU) and SPDR EURO STOXX 50 (NYSEArca: FEZ) provide access to Eurozone markets. However, the two do not hedge their currency exposure, so they may be negatively affected by a weakening euro currency.
The Eurozone macroeconomic environment has steadily improved, with a significant uptick in manufacturing and services PMIs over the end of 2016. Eurozone growth may continue to pick up speed ahead after the European Central Bank revealed increased loan demand and easing of terms and conditions on new loans to help stimulate the economy.
“Why is Europe particularly attractive right now? Quite simply, the European economic engine is starting to rev again. Eurozone PMI grew at its fastest pace in nearly six years in the first quarter. That’s particularly welcome news for the ECB which is starting to see the significant stimulus measures it has put in place to spur growth and lift inflation finally paying dividends,” reports ETF Daily News. “The overall Eurozone economy grew by roughly 0.6% in the most recent quarter, wage growth is showing signs of improvement and an increasing global trade is helping spur further growth.”