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Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

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Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

European-equities-to-gain-despite-strong-Euro

Perspectives

European equities to gain despite strong Euro

Jeffrey Sacks

By Jeffrey Sacks

Head - EMEA Investment Strategy

September 6, 2017Posted InForeign Exchange, Equities, Investment Strategy and Investments

Our Eurozone equity overweight has earned the largest part of this year's return through the appreciation of the Euro. This stems from unwinding expectations of Eurozone economic underperformance and reduced policy divergence with the US. Over the last three months the Euro strength has weighed on European indices, and looking forward we expect further Euro strength which could start to prompt more negative earnings revisions than we have seen recently. However we remain overweight European equities, with the Euro strength likely to be more than offset by the following factors:

First, earnings growth is showing less dispersion by sector. So, even as exporters are hampered by the strong Euro, domestic earnings growth is expected to remain strong. 

Second, European equities have significant dividend yield support. An average dividend in European equities of 3% is over three times the average corporate bond yield in the region, which is the largest discrepancy seen in recent times.

Third, there is great scope for alpha-generation through selectivity in European equities. The best areas for differentiated performance are at the theme and sector levels. We still prefer the high dividend yield and de-equitisation themes. We continue to maintain our cyclical bias over defensive sectors, with our preferred sectors being energy, financials and technology.

Fourth, the global institutional inflows into European equities are in their early stages. Ownership levels currently remain modest and we expect this to pick-up. Some of these inflows are from US dollar-based investors who could be further encouraged by the Euro strength. Other inflows are probably strategic allocations from multi-asset class investors rotating out of depressed yields in fixed income, and unlikely to be deterred by the strong Euro.