Europe

Our investment process identifies three qualities in a company: strong cashflow returns from its operating assets, better-than-expected earnings growth and ignorance of the first two.

There is little doubt the tide is turning for one of the most unloved regions. Investor sentiment towards Europe in July, as measured by the Bank of America Merrill Lynch fund manager survey, was at its lowest level since 2003.

On a local currency basis, the FTSE World Europe ex UK Total Return Index has outperformed the S&P 500 Total Return Index since the March 2009 lows, reflecting the fact that European markets tend to be more sensitive to global growth.

All 14 vehicles in European peer group hit double-digit returns over the past six months, bouncing back from a difficult 2008

The markets have continued to move positively, driven in part by second-quarter results which have so far been relatively supportive.

As 2009 has progressed, I have become increasingly confident about the positive direction of European equity markets.

Equity markets in the second quarter bounced in response to the unprecedented policy actions around the globe.

The perception is the European Central Bank has been an outstanding laggard in its policy responses, that it lacks a clear mandate, and has too many people (22) sitting on its governing board to be aggressive.

Estonia should be a prime focus for emerging market investors for 2009, says Hadley Barrett, CEO of Oxford Sustainable Group.

After a strong performance from most equity markets since the lows of March 2009, it is reasonable to expect a degree of consolidation in the short term.