American and European stocks underperformed this year as investors worry about the rising interest rates. The blue-chip S&P 500 and Stoxx 600 have all had negative returns YTD. But some investors believe that there is more value in Europe than in the US. For example, while the S&P 500 has a PE ratio of more than 20, the Stoxx 50 has a PE of less than 3. So, here are some of the best European indices for 2022.
CAC 40 (CAC 40) is the fund that tracks the biggest companies in France. Some of the biggest ones are companies like Louis Vuitton, L’Oreal, TotalEnergies, and Hermes. Others are companies like Airbus, Sanofi, Kering, and BNP Paribas.
The CAC 40 index has done well in the past few years. For example, the index has risen by more than 24% in the past twelve months and there is a possibility that it will keep doing well in 2022.
For one, luxury groups have a substantial weighting in the index. As the world reopens, there is a likelihood that many wealthy people will increase their spending in luxury goods. Besides, the two-year lockdown has led to substantial wealth as stocks and cryptocurrencies have jumped.
Additionally, there is a likelihood that there will be consolidation and buyouts from American companies. Another catalyst will be the upcoming election in France. While the fund could drop towards the election, there is a likelihood that it will do well when the election ends.
FTSE MIB is the main index of Italian stocks. Like the CAC, the FTSE MIB has done well in the past 12 months as it has jumped by more than 17%. Some of the biggest firms in the index are Enel, Intesa San Paolo, Stellantis, Eni, and STMicroelectronics among others.
The FTSE MIB will likely grow in line with the Italian economic growth. For one, analysts expect that the economy will grow by about 4.7% in 2022 after growing by 6% in 2022. Further, the Italian economy will benefit as the tourism industry reopens. Tourism is an important part of the Italian economy.
Stoxx 50 index
Another European index for 2022 is the Stoxx 50 (STOXX 50) fund, which tracks the 50 biggest companies in the European Union. The index has risen by about 15% in the past 12 months.
The biggest companies in the Stoxx 50 are Louis Vuitton, ASML Holdings, L’Oreal, Prosus, Linde, and TotalEnergies.
While the Stoxx 50 is made up of the biggest firms in Europe, it is also a cheap fund that has a multiple of less than 3. Therefore, analysts believe that it is a good index for investors betting on the European comeback.