European equities are expected to perform well on the back of a rebound in growth in the region. Last year, eurozone GDP expanded at its fastest pace since the 2008 financial crisis, setting the stage for continued growth in the region.
According to a February 2018 forecast by the European Union, growth momentum in Europe should remain robust in 2018, supported by stronger domestic demand; above-average business and consumer confidence; robust job creation; favorable investment conditions; and continued policy support.
Incidentally, the continuing decline in the unemployment rate and relatively low-interest rates in Europe have been a big boost to consumer confidence. And the European Central Bank does not appear to be in a hurry to raise interest rates. Over the past 18 months, it has consistently revised down its inflation forecasts despite revising up its growth forecasts.
With worries over Brexit now on the back burner following agreement on the UK’s transition from the European Union (EU) by 2020, businesses will have time to adopt to new trading arrangements, minimizing the impact of UK’s exit from the EU.
From an investment standpoint, Europe presents a diversified spectrum of opportunities together with exposure to the global economy. The region is home to a number of companies that are world leaders in their respective sectors; such as healthcare, oil and gas, luxury and consumer goods.
Among these companies in which the Harvest European Leaders Income ETF (HEUR: TSX) invests are Vonovia SE, Germany’s largest residential property company; L’Oréal S.A., the world’s largest cosmetics company based in France; Vivendi SA, the French multinational mass media conglomerate; Mondi plc, the international packaging and paper group listed on the London and Johannesburg Stock Exchanges; and Royal Dutch Shell plc, the British–Dutch multinational oil and gas company headquartered in the Netherlands, and ranked as one of largest companies in the world measured by revenues.
With growth picking up in Europe after a decade of slower growth, we believe that leading European companies will benefit from the region’s economic expansion.
For more information about investing in the Harvest European Leaders Income ETF (HEUR: TSX), please click here.