US investors cut their European exposure
US investors scaled back significantly their exposure to Europe as the continent’s economic prospects waned and tensions escalated over Ukraine, according to data on exchange traded funds.
US-listed ETFs exposed to Europe including the UK have seen net outflows of almost $4bn in the past six weeks, reported Markit, the financial data company..
The outflows highlighted a sharp shift in global investor sentiment towards Europe.
There were strong inflows into European bonds and equities at the start of the year as economic data improved and the eurozone returned to stability after its debt crisis years.
According to Morningstar here are some valuation measures
| Germany (EWG) | S+P 5oo | Eurozone (FEZ) | |
| P/e | 14.2 | 17 | 14.9 |
| price to book | 1.54 | 2.35 | 1.38 |
| Price to Sales | 0.72 | 1.66 | 0.79 |
| Price to cash flow | 6.3 | 7.4 | 7.09 |
Looking at the top holdings in these 2 ETFs as well as the top 10 holdings in the S+P 500
it seems questionable whether the valuation discounts relative to the US are justifies
Here are the top holdings in EWG
| Name | Weight (%) |
| BAYER AG | 9.21 |
| SIEMENS AG | 8.3 |
| BASF SE | 7.88 |
| DAIMLER AG | 6.64 |
| ALLIANZ SE | 6.55 |
| SAP ORD | 6.04 |
| DEUTSCHE TELEKOM AG | 3.91 |
| DEUTSCHE BANK AG | 3.85 |
| BAYERISCHE MOTORENWERKE AG BMW | 3.3 |
| VOLKSWAGEN AG (PFD NON-VTG) | 3.14 |
| LINDE AG | 3.14 |
| Name | Weight |
| Total SA | 5.96 |
| Sanofi | 4.96 |
| Banco Santander S.A. | 4.48 |
| Bayer AG | 4.25 |
| Siemens AG | 4.01 |
| BASF SE | 3.64 |
| Anheuser-Busch InBev SA | 3.3 |
| Daimler AG | 3.13 |
| Allianz SE | 2.99 |
| SAP SE | 2.87 |
| BNP Paribas SA Class A | 2.84 |
| Banco Bilbao Vizcaya Argentaria S.A. | 2.71 |
| Eni S.p.A. | 2.56 |
| Unilever NV Cert. of shs | 2.53 |
| Telefonica SA | 2.44 |
| ING Groep NV Cert. of Shs | 2.02 |
| AXA SA | 1.94 |
| Schneider Electric SE | 1.9 |
| LVMH Moet Hennessy Louis Vuitton SA | 1.8 |
| Deutsche Telekom AG | 1.76 |
| Apple Inc. | AAPL | 3.36 |
| Exxon Mobil Corporation Common | XOM | 2.47 |
| Microsoft Corporation | MSFT | 1.89 |
| Johnson & Johnson Common Stock | JNJ | 1.65 |
| General Electric Company Common | GE | 1.47 |
| Chevron Corporation Common Stoc | CVX | 1.43 |
| Wells Fargo & Company Common St | WFC | 1.42 |
| Berkshire Hathaway Inc Class B | BRK.B | 1.31 |
| JP Morgan Chase & Co. Common St | JPM | 1.27 |
| Procter & Gamble Company (The) | PG | 1.22 |
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