Europe Stock Traders Looking Beyond Greece See Japan Parallels
By Sofia Horta E Costa
European stocks are starting to bear a passing resemblance to Japan?s. That may not be a bad thing, judging by the 139 percent surge in the Topix index since 2012.
The Euro Stoxx 50 Index and the euro have moved in opposite directions on 61 percent of days this year, the most since 2003. The equity measure jumped 4 percent last week, while the euro weakened 3 percent against the dollar. In Japan, the stock market and the yen have traded inversely more than half of the time since 2006.
The parallels are real and portend more gains, according to Julius Baer Group Ltd.?s Christian Gattiker. While Japan?s economy is different, both it and Europe have central banks bent on reviving growth and lifting earnings. Investors in Europe can get back to concentrating on that now that the threat posed by Greece is receding, he says.
?It?s a very similar environment in Europe, just with a lag,? said Gattiker, head of research at Julius Baer in Zurich. ?Just as the rally continued when Japan?s economy started to show signs of life, that will be the next leg up for Europe.?
Economic growth in Europe and Japan has lagged behind the U.S. in five of the past six years. Japanese stocks started to take off in 2012 in anticipation of additional stimulus. Exporters led the first wave of the Topix rally and domestic stocks followed.