‘Full Steam Ahead’ on European Stocks: HSBC

Despite the recent rally in European equity markets following the European Central Bank's commitment to help struggling euro zone countries further, there is still plenty of caution about getting back into European stocks.

Not at HSBC, where Charlie Morris, head of absolute return, HSBC Global Asset Management, has proclaimed that it's "full steam ahead" on European stocks.

"We turned bullish on Europe in the summer and I think it's the best place to be for the next few months. It's a very cheap major market and fundamentally undervalued, " he told CNBC Europe's "Squawk Box."

"You've either got the North, where Germany has ridiculously cheap money and is enjoying it, or you've got the South, which is just really cheap with ECB support, " Morris said.

Plenty of others in the market have expressed concerns that the situation in the euro zone is going to worsen again. (Read More: Fall in Europe: Calm Before the Storm? )

"There's plenty of room for European shares to move higher across the board. Whatever story you're looking for, you'll find it in Europe, " he said.

Morris favors financial stocks, which have taken a hammering after a recent series of scandals including Libor -fixing, and concerns about their exposure to peripheral euro zone countries.

Morris's employer HSBC is seen by many as one of the better performers during the credit crisis. It avoided government bailouts and maintained its focus on emerging markets. However, it had its fingers burnt by a money-laundering scandal involving Mexican drug gangs earlier this year.

He argued that the Coppock indicator — which is used to measure when the "period of mourning" following crises ends — suggests that bank stocks are kicking off a long-term upturn at the moment.

"We're looking for sustainable places to put money. The quality banks will do well first, " Morris said. "No doubt they'll be the villains for some time, but fundamentally they're five years on from the problem and prices are very low. The volatility will decrease over time to reflect that they're simpler businesses."

Additional News: US Probe of HSBC Tangled Up in Bureaucracy, Infighting

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Disclosures:

The funds Charlie Morris manages own European equities.

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