Trading ECB buying bombshell—1 week later

Published Wed, Jan 28 20157:00 AM EST

Evelyn Cheng @in/evelyn-cheng-53b23624 @chengevelyn

Even if analysts have mixed thoughts on the long-term effect of Europe's historic quantitative easing boost a week ago , many agree on the top sectors and exchange-traded funds that are set to perform well in the short term. A European exporters' ETF, U.S. Treasurys and even Norwegian oil companies are among the favorite plays from the cross-asset experts interviewed for this article. Lance Roberts, general partner at STA Wealth Management, said the quantitative easing program was too small and "not nearly big enough for an inflationary push in the euro zone," but it's a good enough move for a positive trade on European stocks in the next 12 months. Read More Gundlach: Fed should hold line, ECB QE will fail European equities will benefit more than the region's economy itself from quantitative easing because it will cause banks to sell bonds, take cash and invest in stocks, Roberts said. U.S. bonds will gain as well, he said. "Of course, the biggest beneficiary will likely continue to be U.S. Treasurys as banks sell bonds denominated in euros and then buy Treasurys to protect against euro weakness and pick up a better return on investment." A Credit Suisse report said a "key element" is that the European Central Bank intends to continue quantitative easing until at least September 2016 and not give a definitive end date, "a departure from the ECB's usual reluctance to pre-commit." In this relatively stable environment, guiding trades is the view that the euro zone export economy will strengthen at the very least as the euro declines and European-manufactured goods become cheaper and more competitive abroad. FX expert Marc Chandler owns and recommends WisdomTree Europe Hedged Equity Fund , an ETF that focuses on European companies with significant export revenue and hedges against currency fluctuations so the investor can take advantage of gains in the local market. Read More Hot topics at the annual Inside ETFs conference The fund has returned more than 41 percent since it was launched on Dec. 31, 2009, and has a distribution yield of 2.42 percent. The top 10 weighted stocks are: Anheuser-Busch InBev, Telefonica, Unilever, Mercedes-Benz-maker Daimler, pharmaceutical firm Sanofi-Aventis, Banco Santander, Siemens, Spanish bank Banco Bilbao Vizcaya Argentaria, Bayer and L'Oreal. HEDJ hedges against euro movements by entering one-month forward currency contracts each month and rebalancing at the end of the month. Chandler and other analysts also picked a few of the regions' stock markets such as Spain that will likely outperform the rest of the euro zone because of local government reforms. Jeff Kleintop, chief global investment strategist at Charles Schwab, likes Spain and Ireland as "pockets of resilience" in a short-lived euro zone boost that he called "a sugar high." He said government action in those countries has helped raise recent GDP and PMI figures. In fact, both countries have manufacturing PMIs about the same or greater than the United States. Peter Cardillo, chief market economist at Rockwell Global Capital, is bullish on Italy in his optimistic view of long-term benefits from QE, which he said "will rebuild confidence." "A country like Italy is just beginning to engage with market reform. I think they're (Italy) going to get the biggest share of the pie," Cardillo said. "As far as the market is concerned, markets should do nicely this year." He likes European manufacturing companies, noting that multinationals with significant operations abroad could face the same currency headwinds as U.S. firms are reporting this earnings season. Chandler's personal play on the euro zone situation is buying shares of Statoil, an ADR traded under the ticker " STO ." The stock tracks Norwegian state-owned oil companies. Chandler said he thinks a bottom in oil and Norway's currency is due soon, and even if it takes time the stock offers a 5.7 percent annual divided. PwC's U.S. banking and capital markets leader John Garvey agreed that QE is "probably more helpful" to "Germany and the Nordics of the world." Even as a "slight skeptic" on the effectiveness of the ECB's action, like Cardillo he said companies with their manufacturing concentrated in Europe would do well, such as some mid-cap stocks on the DAX and in France's CAC 40. STA's Roberts said another ETF that is predominantly European is the Vanguard FTSE Europe ETF that is a $4.7 billion market-cap fund with a 0.12 percent expense ratio. Top holdings include Nestle, Royal Dutch Shell and Novartis. For a more global basket, Roberts recommended Vanguard International ETF and the SPDR DWX International Dividend Stock . The boost from quantitative easing to Europe's economy may also help the global macro outlook revive and make for a trade there, some analysts said. "Overall euro zone growth is brighter looking ahead to 2015-2016," Schwab's Kleintop said. "The better way to play… is emerging markets selling into Europe." Unlike other analysts who found European stocks cheaply valued, he said European equities trade at an earnings multiple of 14, making them more expensive than those of emerging markets, with an earnings multiple of 11 times. Read More Picking up the pieces from the ECB's QE The good cheer surrounding the flood of money from the ECB into the market still requires some careful stock and ETF selection. "I wouldn't go crazy," STA's Roberts said. "Let's not put 30 percent of our portfolio in Europe." Disclaimer

A euro sign sculpture is seen in front of the headquarters of the European Central Bank (ECB) in Frankfurt, Germany.

martin Leissl | Bloomberg | Getty Images

A European exporters' ETF, U.S. Treasurys and even Norwegian oil companies are among the favorite plays from the cross-asset experts interviewed for this article.