What’s next for Europe? Outlook 2014 by Rory Bateman, Head of UK and European Equity

Looking ahead: what's next for Head of European and UK Equities, Rory Bateman, and European Credit Fund Manager, Alix Stewart, give their outlook for Europe in the year ahead.
Rory Bateman gives his views on how 'The STARS are aligned' from an equities perspective: Europe?

• Supportive macro environment.  The European economy has troughed and we are expecting positive GDP and positive earnings revisions from here.
• Tapering in the US should have a minimal impact on European stocks but will be detrimental to emerging and US markets.
•  Asset quality review.  We believe the AQR will restore confidence in the European banking system and put to rest fears of a eurozone banking crisis.
• Risk premium in Europe is still at elevated levels despite the market appreciation. Valuation of European equities remains compelling versus history and other equity markets around the world.
• Stock selection is critical now that correlations have normalised. Our preferred sector is consumer cyclicals where we see the greatest upgrade potential.