After some volatility during the summer, Q4 2019 added to the rising tide experienced by European equity markets since the dip in late 2018.
A less uncertain political landscape, with UK general elections out of the way and more constructive efforts coming from the trade talks between China and the US, in conjunction with an accommodative monetary policy from the European Central Bank (ECB), have all contributed significantly to this backdrop.
However, even if economic data remain subdued on the continent, sectoral moves characterised a good part of the last quarter.
Looking ahead, forecasts for 2020 also remain relatively optimistic in terms of earnings growth, despite the fact corporate reporting for Q3 did not manage to reverse the trend of gently declining management guidances across the board.
Nevertheless, it is important to note that Europe still offers fertile ground for investors, as many opportunities are simply overlooked as a result of the grey clouds hanging over the continent for the past three years.
Innovation, for example, is currently an exciting theme insofar as it will be an important driver of growth. It can be found in the most diverse sectors, such as in healthcare and the biotech space, but also within some selected industrials.
In conjunction with innovation, technology is another thematic in the region that remains under-appreciated. One reason for this is the abundance of big names being US listed (notoriously known as the FAANGs: Facebook, Apple, Amazon, Netflix and Google) and therefore dragging investors' interest away from the continent to the other side of the Atlantic.
Above all, a socially responsible investment lens is needed to be able to truly capture companies with the best long-term prospects and therefore achieve what is known as sustainable growth.
This approach encompasses the granular analysis of all the risks a firm may face, therefore considering the best way to mitigate them.
Mark Denham is head of European equities at Carmignac
• Focusing on businesses that can grow largely under their own steam
• Innovation does exist in Europe, the only requirement is to look for it
• Companies with bad SRI rating
• Companies not reinvesting their profits to grow their business