The expected fall of the euro against the dollar should help the recovery in corporate earnings. The major drawback that can affect this possibility is that flows are not accompanying and global investors have reduced their positions in European stock ETFs by € 2,000 million of net outflows.
“If we compare previous periods with similar negative flows, we see that they coincided with key support areas (except in 2008) and to buy in the market with over € 1,000 million outflows had a hit ratio of 92% in 12 months, higher than any other scenarios that we consider,” explain Morgan Stanley experts.
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