European ESG equities Deep Dive: Macro outlook turning favourable

Cautious over 'valuation boom'

Kathleen Gallagher
clock • 4 min read
The listed wind energy sector has undergone a "valuation boom"
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The listed wind energy sector has undergone a "valuation boom"

Despite the beginning of 2022 looking promising for European equities, the first half of the year for the asset class has been fraught. However, as policymakers in Europe start to take concerted action to hit net zero as soon as possible, certain sectors and funds are looking more favourable.

Dial back to 2021 and European stocks were faring relatively well. In the fiscal year, the MSCI ACWI ex Europe index returned 20.5%, while the MSCI AC Europe index returned 17.9%, according to FE fundinfo. Prospects were good for 2022 as there was "plenty of scope for catch up as pandemic-related restrictions were easing across the region, and the rollout of the EU's Recovery Fund was set to provide a further boost to growth", according to Hugh Gimber, global market strategist at JP Morgan Asset Management. However, the outlook deteriorated substantially as Russia invaded Ukraine. It ...

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