HSBC believes recent correction in European equities could continue

- Sees earnings headwind from the stronger euro which it says is already weighing on analyst revisions 
- HSBC economists forecast European growth momentum fading into 2018. Indeed, once the cyclical recovery ends
- Sees annual Eurozone growth will trend at just 1.25%, well below pre-crisis average, due to softer labour participation and population growth and sub-par productivity
- Nearer term, HSBC says, political uncertainty remains with Brexit negotiations ongoing and an Italian election on the horizon, and sees some complacency with Europe leading investor inflows YTD, and with the most bullish sell-side analysts globally
- "Earnings growth expectations this year are a lacklustre 9% and set to be lower next in our view, whilst valuations are a full 15.5x fwd P/E. We prefer EM, of pro-cyclical regions," HSBC says

20 Nov 2017 - 11:53- Economic Commentary- Source: HSBC

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