Unnerved by the escalating sovereign debt crisis, American fund managers had viewed European stock markets as far too risky a proposition in recent years. But confidence in the region’s political stability and economic recovery has started to grow, and European stock markets climbed this year as US investors poured money into equities again.
“Clearly 2013 was the year when we saw large inflows from the US into Europe for the first time in several years and it has contributed to a significant expansion of equity valuations in Europe,” said Emmanuel Cau, an equity strategist at JPMorgan Cazenove. Data from Lipper showed that in the week ending Wednesday December 18, American funds investing in European shares saw a record 25th consecutive week of inflows.
“Investors have been much more comfortable with the tail risks in Europe,” Mr Cau said, adding that the process began in July 2012, when European Central Bank President Mario Draghi pledged to do “whatever it takes” to protect the euro.
Boosted by that revival in confidence, Germany’s DAX index has risen 25.5pc this year and hit record highs, the CAC 40 in France is up 18pc, Spain’s IBEX has gained 21.4pc and the Italian FTSE MIB has advanced 16.6pc.
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