10th May 2012

Keeping the eurozone in context: Fidelity

Election results in Greece have reignited the debate about whether the country will be forced to leave the eurozone, while the victory of pro-growth Francois Hollande in the French presidential elections has raised some concerns about France’s austerity commitments.   

In this piece, Fidelity Worldwide Investment points out that, despite the current gloom, investors should be wary of allowing well-documented problems in the eurozone to cloud their views of global equity markets. A number of considerations support a more balanced view towards global equities:

• Eurozone equities account for only 9.8% of the MSCI All Country Index - less than a quarter of the US market’s 46.7% share and not much bigger than the UK market’s 8.5% share.
• The share of Japanese equities in the MSCI All Country Index plunged from around 44% in 1988 to just 7.6% today. Despite the fact that Japan was a much bigger weight in the Index, the chart below shows that Japan’s problems did not prevent global equities from moving ahead during this period, with the MSCI All Country Index (ex Japan) rising by 460% since 1988.

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