Europe as an investment destination: Why individual companies are better than the index

Europe as an investment destination: Why individual companies are better than the index

According to a report from www.nzz.ch, investors are advised to focus on selected individual companies instead of the index when investing in Europe. The reason for this is the stalling economic growth in the euro zone, which, according to forecasts by the International Monetary Fund (IMF), will only increase by 0.9 percent in 2024. In comparison, growth of 2.1 percent is forecast in the United States. This development is also reflected on the stock markets, which is why investment experts such as Jörn Spillmann from Zürcher Kantonalbank (ZKB) advise against investing in European stocks. In the long term, the American S&P 500 has delivered around four times more returns than the Euro-Stoxx 50 since the financial crisis, with tech companies such as Apple, Microsoft and Amazon in particular having contributed significantly to the S&P 500's soaring.

Careful stock selection and investment in promising individual companies in Europe that offer attractive returns despite sluggish economic growth are recommended by experts such as Markus Hansen, portfolio manager and analyst at Vontobel. For example, luxury goods providers such as LVMH or Hermès as well as companies in the technology sector such as the British Relx Group and the IT service provider Wolters Kluwer could offer good return opportunities. This is in contrast to the general development of the European stock market, where growth pearls are rare.

According to economic experts such as Stefan Legge, professor of macroeconomics at the University of St. Gallen, the long-term strengthening of the euro zone lies in politics. This must create the right basic conditions for a flourishing economy. Markus Hansen hopes Mario Draghi's report on the continent's competitiveness will spark new optimism among investors. Jörn Spillmann, on the other hand, is more skeptical as to whether the proposals can actually be implemented, especially given the political fragmentation of the euro zone.

Overall, it shows that careful stock selection and investment in promising individual companies in Europe could be a promising strategy for investors in the face of faltering economic growth and political challenges.