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WisdomTree comments on falling Euro


WisdomTree Europe’s ETF Strategist Nizam Hamid, (pictured,) has commented on the falling Euro, writing that the recent decline in the Euro has been relatively rapid falling by close to 5 per cent since the surprise outcome of the US elections.

“However, in reality this has only served to accelerate a trend that has been apparent from our point of view for most of the year. The Euro’s recent peak versus the USD was in early May when it was trading at over EUR1.15 to the USD, while it’s now trading at EUR1.057, a fall of 8.38 per cent. The prospects for the Euro are also shrouded in political risk uncertainty with the Italian referendum in December 2016 and upcoming elections in France and Germany in 2017.

“WisdomTree’s export-oriented UCITS ETF, Europe Equity UCITS ETF (HEDF), features Eurozone companies that derive more than 50 per cent of their revenue outside Europe. We expect that these companies may benefit from the Euro’s weakness and the anticipated pickup in economic growth in markets such as the US. During the time that the Euro has fallen by 8.38 per cent, the index that our UCITS ETF, HEDF, tracks (the WisdomTree Europe Equity Index) has risen by 4.02 per cent, outperforming the broad benchmark, MSCI EMU which has risen by 2.26 per cent. Additionally, HEDF has outperformed the Euro STOXX 50 which has risen by 2.10 per cent.

“If the Euro heads to parity versus the USD – or potentially overshoots it – European investors may wish to consider a large cap, liquid basket of export-oriented stocks.”

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