The year 2016 has been particularly unpredictable for investors, which is not surprising if we take into consideration that it has been a year of important geopolitical events, such as Brexit or the US Presidential Election. Equity markets saw a noteworthy sector rotation: sectors such as consumer staples and energy significantly outperforming in the first half of the year. The unexpected outcome of the British referendum was a turning point for equity markets: financials started to outperform as valuations reached extreme levels and inflation expectations started to rise. Events like this can have repercussions on the performance of the equity markets.
Forecast for 2017?
It is safe to assume that European equities have an excellent opportunity to break out of the trading range where they have been stuck for the past couple of years. We therefore highlight three reasons to be optimistic for the asset class in 2017.