BlackRock has cautioned that surging energy costs and rising valuations indicate European equities are no longer as attractive an investment option as they were several months ago.
Helen Jewell, Chief Investment Officer for International Fundamental Equities at the firm, which manages $13.9 trillion in assets, stated that the economic shock from high oil and gas prices, combined with a narrowing valuation gap between European and U.S. stocks following relatively strong recent performance in Europe, has led her to temper her recent optimism toward European markets.
Jewell remarked, "It's difficult to be as positive on Europe as before," pointing to the region's exposure to the impact of global energy price shocks on consumer spending across the continent.
She added, "You can no longer proclaim as loudly as before that Europe looks cheap. A year ago, the valuation gap was very compelling. Now that gap has narrowed, and from an energy perspective, Europe's exposure is significantly greater... Therefore, we have to be more selective in seeking opportunities."
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