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Forget Greece, Europe is a great place to invest right now All eyes have been on Europe as the Greece crisis goes from one stage to the next. The saga has caused great concern among investors as to how European stock markets will be affected. But so far,the time has been Limited. Stock markets across Europe have been volatile, opening and closing higher and lower depending on the relative success of that day’s Greece discussions. The Euro Stoxx 50, which covers the biggest companies from across 18 European countries, has swung wildly up and down, but is still up 7 per cent over the last six months, and over three years is up nearly 60 per cent.  

SUPPORTING INVESTORS

One of the main reasons the market is still up – rather than taking a big hit – is that, despite what has gone on in Greece, the European Central Bank (ECB) has a number of programmes in place to support the rest of the Eurozone economies. The largest of these is a €1 trillion QE programme that began in March and will continue through to September 2016. In the meantime, movements in equity markets are likely down to hedge funds and day traders making the most of the volatility. For savers with a long-term outlook, “it is important to avoid getting swept up in short-term market volatility as traders react to events,” says Jason Hollands from TilneyBestinvest.  

BEST OPPORTUNITIES

Many investment managers are favouring Europe at the moment, because regardless of what is going on in Greece, the overall picture is positive. “Despite the concerns over a potential Greek exit from the euro, the ECB’s €1 trillion stimulus program should be supportive to European equities,” says Chris Mayo from Wellian Investment Solutions. This is because “all those trillions of euros have to find a home somewhere. They will find their way into assets and those assets include European equities,” explains Kevin Lilley from old mutual Global Investors. OPEN FOR BUSINESS But perhaps the more important message for anyone with savings invested in European stocks is that economies do not dictate stock market performance. “The investment industry spends a lot of time looking at economies, but actually the relationship between economic data and stock market returns is not particularly convincing,” explains Hollands. When looking at investments, “company statistics are relatively more important to investors than what the economy is doing,” Hollands says. With this in mind, investors ought to shift their focus away from Greece towards what really matters; that European companies are now doing better than they have for years. “The key question for equity investors [over Greece] is what the impact will be on the companies I own, and how much will it hit their sales,” says Clive Hale of FundCalibre. Many big European companies draw their business from around the globe, and aren’t solely reliant on the health of the Eurozone. “The fundamentals – or the state of companies and economies in Europe – are actually much better than they have been for some time,” he says.

COMPETITIVE

One of the important factors is the weaker euro. This makes European companies’ exports far more competitive on the world market – and businesses in Europe are very dependent on exports for profits.   “European companies’ earnings and profitability has in the past been burdened by a very strong euro-dollar exchange rate,” explains Lilley. Since last summer the euro has fallen around 20 per cent against the dollar, making goods produced in Europe far cheaper. “This will be stimulative for European companies’ earnings, and we think the upcoming financial reporting season will be very good,” Lilley says. Another boost has been cheaper oil. Last year Brent crude was priced around $120-$150 a barrel, but it halved at the start of the year and is still priced around $60 a barrel. Lilley explains: “Europe is a net importer of oil and European companies use a lot of it, so the price falling will be very positive for them.”

BEST EUROPEAN FUNDS

Given all of this, “the backgound for European equities is stronger than it has been for years,” he says. As for the best funds to use, Hollands likes the Threadneedle European Select as a general all-rounder. For people seeking extra income on top of growth, he says the standard Life European Equity Income fund is a good choice. For a growth investor, Chris Mayo of Wellian Investment Solutions suggests the Schroder European Opportunities fund. “The fund currently has its biggest country exposure to France, Germany and Switzerland, with its biggest sector positions in financials and healthcare,” he says.  

10 Reasons To Choose Germany

10 Reasons To Invest in Germany

1. Large Market

With 82 million inhabitants, Germany is the European Union’s most populous country and therefore also the largest market within the EU. With a gross domestic product of more than 2.2 trillion euros, Germany is the largest economy in Europe and the third strongest economy in the world.

2. Central Location

Germany’s central location in Europe make it a hub for goods and services. Germany is especially benefiting from EU enlargement. As a result, it is the only country among the seven most important industrialized nations to increase its share of world trade since 1995.

3. Open Market

Germany is an open market and warmly welcomes foreign investors. That is demonstrated by the 22,000 foreign enterprises that have established businesses in Germany and now employ more than 2.7 million people. The German market is open to entrepreneurial investment in practically all areas. There are no longer any state-controlled industries. Germany is receiving increasing attention from private equity firms and hedge funds due to its highly attractive companies and favourable investment conditions.

4. International Location

More than 7 million foreigners live in Germany. Several metropolitan regions have prominent foreign communities with their own schools, churches, shops and restaurants. For example, a large number of Japanese live in the Düsseldorf region, many Koreans in and around Frankfurt and many Chinese in Hamburg. Approximately 70% of German blue- and white-collar workers can speak English.

5. Qualified Personnel

Germany offers an exceptionally well-qualified, motivated and conscientious workforce. German employees’ high standard of knowledge and skills is internationally recognized. The demand for professionals is met by 383 institutions of higher education. Another pillar of the German training system is the “dual system” of vocational education, which combines workplace training and school instruction and produces an acknowledged high standard of training closely oriented towards the needs of industry.

6. High Level of Innovation

Statistically, Germany has 277 international patents per one million inhabitants – more than anywhere else in the world. The close cooperation between industry and world-famous research institutions like the Max Planck and Fraunhofer Institutes swiftly transforms new ideas into products for the world market.

7. Highly Developed Infrastructure

Germany has a closely knit network of roads, railways and international airports. That guarantees swift connections. The airport in Frankfurt is an international hub. The Port of Hamburg is one of largest container transshipment centres in Europe. Communications infrastructureisexceptionally well-developedthroughoutthecountry.

8. Legal Security

Germany is a modern constitutional state with transparent and reasonable laws. The advantages are internationally recognized. The German legal system has served as a model for legal systems in many other countries. International studies demonstrate that German legal security is highly regarded by investors. Among all countries, Germany ranks fourth in terms of legal security.

9. Strong Mittelstand

The German economy is characterized by privately owned small and medium-sized firms, the Mittelstand. 85% of all businesses are small or medium-sized. This makes German industry very flexible, multifaceted and competitive. Many of these highly specialized firms are world market leaders in their field, so-called “hidden champions”.

10. World Famous Trademark

Products with the “Made in Germany” seal stand for the highest quality worldwide. This has played no small part in maintaining Germany’s position as world champion exporter for many years. The automobile, mechanical engineering, electrical engineering and chemical sectors are particularly strong. Industries of the future such as environmentally friendly energy production and nanotechnology, in which the number of patent applications is doubling every two years, are steadily gaining in importance. Foreign investors can profit from the “Made in Germany” seal of quality. Source: www.magazine-deutschland.de