Record Confidence in European Shares: Heightened Expectations for Rise

Historic Confidence Period in European Markets

Investor confidence in European markets has reached historic levels, drawing attention. The latest Bank of America European Fund Managers Survey revealed that the growth outlook and corporate profitability expectations expressed as percentages have risen to the highest point since July 2021. The overall sentiment index generated by the survey has reached a level of 7.4, marking a peak not seen in the last four years.

Record Levels of Optimism

A significant portion of fund managers believes that the current market movements will continue to rise. A net 81% of participants expect gains in European equities in the short term, while a net 92% anticipate that the upward trend will persist over the next 12 months. These figures notably stand out among the survey's historical data.

New Era Highlighting Profitability

Investors are citing corporate earnings as the primary source of the anticipated rise. A net 86% of participants believe that the primary factor driving stock price increases will be growth in profit expectations. In this period, interest in central bank policies has remained limited, while views suggesting that interest rate cuts or reductions in risk premiums will be decisive are relatively few.

Significant Increase in Valuation Perception

The survey results show a notable improvement in the perception of valuations in European markets. A net 32% of investors still find stocks attractively priced, and this figure approaches the highest levels seen in the last five years. Additionally, the average cash ratio of European fund managers has dropped to 2.8%, reaching the lowest level in the last 12 years. This situation also indicates an increased risk appetite.

Growth Expectations Support Optimism

A net 78% of participants project stronger growth in the European economy over the next 12 months. Hopes regarding potential fiscal stimulus measures in Germany stand out as one of the factors underlying this optimism. According to analysts, the investor outlook is transforming into an optimism based on fundamental indicators, positively impacting the markets.