Positive Second Half for Europe Stocks: Fund Manager
The second half of the year should see European stocks performing positively, Michael Browne, portfolio manager, Europe at Martin Currie, told CNBC Friday.
"It's been a pretty miserable first half with difficult credit markets and increases in oil prices," Browne said.
"We have been worrying about Chinese growth, but now we've seen positive figures. There are even strong figures out of Chicago, so everyone's getting enthusiastic about the US economy again," he added.
Manufacturing in China grew at its slowest pace for 28 months in June, according to PMI data released Friday. There was an unexpected jump in business activity in the US Midwest in June, according to the Institute for Supply Management-Chicago's business barometer, which helped boost US stock markets Thursday.
Markets have been concerned about the end to the second round of the Federal Reserve's policy of creating money, known as quantitative easing.
The "overriding pattern" for the Pan-European index in the past decade has been a negative first half and a positive second, according to Browne, who thinks that June's relatively poor performance can be attributed to fear.
"Fear and worry…and haven’t we had a load of that!" he said. "Fear about Greece in all the steps and stages. Fear of the US slowing down, fear of China failing. The market's ongoing fears about Greece are profound, it is a mess and in the end the EU will have to write them a check," he added.
"How that check is written is a matter of semantics, just as long as the Greeks show willing (and boy do their austerity measure show willing) and stay within the structure," Browne said.
Earnings estimates have slowed in Europe in the last two months but the same thing happened in the US and they have started picking up again, he added.
"We are coming into July with low expectations, but that might be the best place to be," Brown said.
Bernhard Eschweiler of Silvia Quandt is also optimistic about the next six months for European stock markets.
"There are strong corporate possibilities that aren't reflected in stock prices," he told CNBC Friday.
There is much potential for mergers and acquisition in Europe in the second half, with private equity companies and emerging market competitors the likely predators, according to Eschweiler.
"Valuations of companies across Europe are actually very attractive," he said.
Asked about favoring German growth, Browne said that the country is still "the core of European growth".
"In Germany, there are simply more people in jobs," said Eschweiler, who favors German stocks. "Spending money is increasing dramatically."