European investors have turned abruptly positive on their regional economy. According to the Frankfurt-based consultancy Sentix, market watchers are now more confident than they have been in over ten years. About three-fourths of the sample group is represented by small-scale investors. That optimism is based on soldiering growth, with the manufacturing sector delivering some of the strongest gains. The sentiment data rebuts the conventional view that populism should encourage defensive allocation behavior. One explanation: Regional investors acknowledge that the coalition nature of many European governments promotes centrist tendencies. While most continental bourses have been holding their own this year, investor enthusiasm is spotlighted in Poland. Warsaw is one of the best performing stock markets worldwide; the broad equity index has delivered a dollar-based gain of more than 15% since the beginning of January. ■
Our Vantage Point: European stock markets may be a sleeper story this year. Many analysts have focused on debilitating political trends, while overlooking the impact of early-cycle economic gains.
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