Credit Suisse goes overweight continental Europe stocks on recovery potential

Credit Suisse (SIX:CSGN) said on Thursday it upgraded continental European equities to overweight and predicted they could become potentially a longer-term investment, citing a catch-up in economic recovery, valuations and excess liquidity.

“European GDP is 5.5% below previous peak, the U.S. is back to previous peak and we now see a potential catch-up in Europe on the basis of the vaccine roll-out (possibly 70% of the adult population by early September), the fiscal boost (2% of GDP) and excess savings (4.5% of GDP),” Andrew Garthwaite said in a note to clients.

Credit Suisse singled out Southern (NYSE:SO) Europe, especially Spain and Italy for largest GDP recoveries, thanks to tourism exposure, and the outsized exposure to banks. The bank also said it reduced its overweight in Germany.