Investing in Europe, Is this the right time?

I have avoided investing in European companies because of negative news coming from there since 5 years ago. Back in 2010, the five so-called PIIGS countries were facing financial troubles due to huge debt problems. The PIIGS refers to Portugal, Ireland, Italy, Greece and Spain.

“ON MAY 10th European finance ministers meeting in Brussels produced a three-year €750 billion rescue package for the euro zone, designed to convince financial markets that the weaker members of the single currency would not be abandoned. “ (Source: The Economist)

Greece is still in trouble and had difficulty repaying its debts. The situation is still evolving as I write.

We know that the European Central Bank has embarked quantitative easing, buying up €60 billion of public debts monthly and this will last until at least September 2016.

ECB had also raised GDP forecast for Euro-zone to grow at 1.5% in 2015 and 1.9% in 2016, based on its March 2015 report. As for UK, the latest forecast for GDP growth rate is 2.4% for 2015 and 2.3% in 2016. (UK Budget 2015, 8 July 2015)

I tracked three major economies that are in Europe ie UK, Germany and France. The respective stock indices are FTSE 100 (UK), DAX (Germany) and CAC (France).

Indices 31 Dec 2007 15 Sep 2008 31 Dec 2014
Germany DAX 8,067.32 6,064.16 9,805.55
FTSE100 (UK) 6,456.90 5,204.20 6,566.09
CAC 40 (France) 5,614.08 4,168.97 4,272.75
Indices 31 Dec 2014 5 Mar 2015 8 Jul 2015
Germany DAX 9,805.55 11,504.01 10,747.30
FTSE100 (UK) 6,566.09 6,961.14 6,490.70
CAC 40 (France) 4,272.75 4,963.51 4,639.02

Change between 5 March and 8 July 2015

Indices Change
Germany DAX -6.58%
FTSE100 (UK) -6.76%
CAC 40 (France) -6.54%

For the three months, all three indices were down around 6.5%.

Year-To-Date Change 2015

Indices Change
Germany DAX 9.60%
FTSE100 (UK) -1.15%
CAC 40 (France) 8.57%

From the start of this year, both Germany and France were up 8.5 to 9.6% whereas UK’s FTSE100 was down 1%.

Change between 31 Dec 2007 and 8 July 2015

Indices Change
Germany DAX 33.2%
FTSE100 (UK) 0.5%
CAC 40 (France) -17.4%

When comparing pre-Global Financial Crisis level and now, Germany’s DAX had done well to increase 33.2%. UK’s FTSE 100 was hardly changed and France’s CAC was still under-water, negative 17.4%.

Action taken

I have moved into investing in equities of companies operating in Europe (including UK). The amount is not much but it was a start. Since I do not know the European stock markets that well, I relied on my financial advisor to recommend a unit trust. The investment risk is high and I am looking at long haul investment.

Copyright © 2015, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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