Despite the recent rally in financial markets, stocks listed on the German benchmark DAX index still offer good value for investors and are a more attractive investment than those listed on Wall Street's S&P 500, Gerry Fowler, global head of equity & derivative strategy at BNP Paribas told CNBC.
“Despite the recent rally, the DAX is still cheap if compared to the S&P,” he said.
Equities were roughly where they should be based on the pace of deleveraging, Fowler said.
He advised investors to wait and look for opportunities to buy cheaper.
“There aren’t any large pools of money looking to buy into equities at these levels," he said.
Fowler added that confidence and consumer spending were picking up in Germany, Europe’s largest economy. The boost in domestic spending would make it less export-reliant.
Fowler advised taking a long position on the DAX because of the low interest rates in the euro zone, while going short the Nikkei because Japan’s interest rates were too high for the economy.
Other trading ideas included buying cheap stocks in the European industrials, consumer Discretionary, healthcare and telecoms sectors.
“The cyclicals in Europe this year have been performing well – in valuation terms they are still 15-20-percent cheaper than defensives," he said.
Fowler also recommended investing in protection via the VIX, a popular measure of market risk, or other market because of the current market volatility.
“Our view is that a lot of markets, in particular the S&P probably won’t end year any higher than they are now. Really (it is) just a matter of ensuring you make some money into a pull back," he said.
Fowler added he didn’t expect most markets, especially the S&P to end the year any higher than they are now.