Record Confidence in European Stocks: Rise Expectations Have Reached Their Peak

Historic Period of Confidence in European Markets

Investor confidence in European markets is reaching historic levels, attracting attention. The latest Bank of America European Fund Manager Survey reveals that growth outlooks and expectations regarding corporate profitability have reached their highest point since July 2021. The general sentiment index created by the survey has reached a level of 7.4, marking the peak of the last four years.

Record Levels of Bullish Expectations

A large majority of fund managers believe that the current market movements will continue to trend upwards. A net 81% of participants expect short-term gains in European equities, while a net 92% believe that the upward trend will persist over the next 12 months. These figures stand out significantly among the historical data of the survey.

A New Era Highlighted by Profitability

Investors cite expected price increases as primarily driven by corporate earnings. A net 86% of participants believe that the fundamental factor behind rising stock prices will be an increase in profit expectations. In this period, interest in central bank policies remains limited, with few believing that interest rate cuts or a decrease in risk premiums will be the determining factors.

Notable Improvement in Valuation Perception

The survey results show a significant improvement in the perception of valuations in European markets. A net 32% of investors still find equities attractive at current prices, and this figure is near the highest levels seen in the past five years. Additionally, the average cash ratio among European fund managers has decreased to 2.8%, the lowest level in the last 12 years. This situation also indicates an increasing risk appetite.

Growth Expectations Support Optimism

A net 78% of participants anticipate stronger economic growth in Europe over the next 12 months. Hopes regarding potential fiscal stimulus measures in Germany are emerging as one of the factors behind this optimism. According to analysts' evaluations, the investor perspective is transforming into optimism based on fundamental indicators, positively impacting the markets.