True, the outlook for the euro zone economy is not great, but there are plenty of good reasons why the euro zone's peripheral equity markets look appealing right now, one expert tells CNBC.
"It is too early to talk about growth, but what is interesting is that all the leading indicators we are looking at are currently touching a bottom and the risk of downside is low," said Patrick Legland, global head of research at Societe Generale, adding that he favored equity markets in the peripheral euro zone.
While foreign investors have piled into government bonds in peripheral euro zone countries such as Spain, Italy and Portugal this year as concerns about the debt crisis in the region ease, stock markets in those countries have broadly underperformed major equity markets.
For instance, Spain's benchmark stock index is up 1.87 percent so far this year, while the pan-European FTSEurofirst 300 index has gained more than 7 percent. While Italy's stock market has rallied almost 6 percent and Portugal is up about 5 percent, they have lagged gains on major global markets. The S&P 500 is up 14 percent and the Nikkei is higher 33 percent even after heavy selling in May.
"We have seen peripherals make huge improvements in their budget deficits, secondly they are massively declining their unit labor costs and we are starting to see European companies re-positioning there," Legland told CNBC Asia's "Squawk Box," outlining reasons why he thinks assets in the euro zone periphery look attractive.