While the iShares MSCI France ETF (NYSEArca: EWQ), the largest France ETF trading in the U.S., has recently seen some outflows, European stocks are not showing elevated volatility ahead of the upcoming first round of France’s widely anticipated national election.
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.