Europe’s Got A List Of Problems, And Investors Aren’t Here To Listen To Them

Europe’s Got A List Of Problems, And Investors Aren’t Here To Listen To Them
Reda Farran, CFA

over 1 year ago1 min

Mentioned in story

Europe’s list of problems seems to be growing by the day: a war with no end in sight, still-soaring inflation, an energy crisis that could result in rationing, a slowdown in economic growth, a central bank that’s started to aggressively hike interest rates, and a shared currency that’s slumped to a 20-year low relative to the dollar. How the region will endure all these issues is anyone’s guess, but investors aren’t hanging around to find out. They’ve pulled almost $100 billion from European stock funds in the past year, as you can see from the chart above, way more than from any other major region.

About 60% of economists see a recession hitting the euro zone in the next year, according to Bloomberg. And that’s certainly not going to help European firms’ profits, which is why Citigroup is warning about a slew of downgrades that are likely to happen in the next few months, and why Morgan Stanley is warning that profit margins may face the biggest decline in more than a decade. With such pessimistic forecasts and Europe’s long list of struggles, it’s no wonder investors have been fleeing European stocks in droves.

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