Salient to Investors:

Barry Norris at Argonaut Capital Partners said:

  • Buy European stocks with the highest potential for earnings growth over those with the cheapest valuations.
  • The big liquidity rush that has made everyone enthusiastic won’t last the year – equities will rally because they are the least-worst option among asset classes.
  • ECB actions have diminished the chance the euro area will splinter, but have yet to help the economy recover.
  • Vibrant Spanish markets are not justified because there are no signs Spain is coming out of recession.
  • Buy consumer staples, insurance, technology, property and auto-industry stocks.
  • Industrial, material and utility stocks will underperform the broader market
  • Believers of improvement in the peripheral countries in the last six months are deluded – markets underestimate the time it will take for growth to return there.
  • Little confidence in the peripheral outlook.

BNP Paribas Investment Partners and Amundi expect European equities will gain 10 percent in 2013.

Christian Dargnat at BNP Paribas Investment Partners said all companies in Italy and Spain, regardless of quality, were penalized by the cost of financing, but this has and will continue to improve and favors a revaluation of their stocks.

The MSCI Europe Value Index has risen more than twice as much as the MSCI Europe Growth Index since the ECB announcement.

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