Investors are hunting for bargains in unloved corners of Europe’s equities market as central banks’ plans to unwind their powerful stimulus programmes dull the allure of glitzier tech companies.
MSCI’s index of value stocks in Europe has jumped almost 5 per cent in the first three weeks of 2022 on a total return basis, far exceeding the 4 per cent decline for the index provider’s broad World measure of developed market equities. The gap in local-currency returns would mark the biggest monthly outperformance on record if it holds through the remainder of January, FactSet data to the close of trade on Wednesday show.
Value stocks — companies that are priced inexpensively compared with fundamentals like profits or book value — have lagged behind as racier, but more richly priced, technology shares have flourished. European value stocks have only outperformed the broader global market in two of the years following the global financial crisis in 2008.