Although several years of political and social uncertainty in Europe have tended to deter many investors, those who tread carefully are likely to find ample opportunities in the region.

“The social upheaval has had an impact on investors, [and] a lot of them have felt more comfortable going to the U.S. rather than parking their money in Europe,” says Serge Pépin, an investment specialist in European equities at London-based BMO Global Asset Management (EMEA) Inc. and a member of the subadvisory team for BMO European Fund. “That is too bad, because there is definitely a quality trade in Europe that has been forgotten.”

There were expectations that particularly dramatic upheavals over the past year would dampen European investment even further; these events included the strong backlash against waves of refugees from the Middle East and northern Africa, as well as the stunning upset in the so-called “Brexit” vote, which means the departure of the U.K. from the European Union (EU).

However, the sky has not fallen. “The market has not done what people expected,” says David Hussey, head of pan-European equities at Manulife Asset Management (Europe) Ltd. in London, U.K. “The underlying economic momentum has continued.”

Economic indicators such as retail sales and consumer confidence may not be booming, but those metrics are positive across the continent, according to Hussey.

Pépin, for his part, anticipates that Europe, including the U.K., will see economic growth of 1.3%-1.4% this year, similar to the estimated 1.5% of 2016.

Quantitative easing

The EU’s economic resilience is due in part to the European Central Bank (ECB), which began its bond-buying quantitative easing (QE) program in 2015. QE was originally intended to end in September 2016, but is now scheduled to end in December 2017. In addition, the ECB maintained one of its key interest rates at 0% throughout 2016.

“The fact that [the ECB] has extended [QE] has shown that the central bank has realized that the growth is not robust,” says Peter Hadden, portfolio manager with Fidelity Institutional Asset Management in Smithfield, R.I., and portfolio manager of Fidelity Europe Fund.

But the ECB’s bond purchases, which have made accessing funding easier for companies, and the declining value of the euro and the pound sterling following the Brexit vote should help EU-based companies’ competitiveness and stimulate economic growth in the region, adds Hadden.

Other steps designed to support growth include a move by the Bank of England in August to halve its interest rate to 0.25% from 0.5% – a strategy that Hussey describes as “panicked” in the wake of the Brexit result. Although the ECB is likely to maintain its low interest rates for the foreseeable future, Hussey says, the Bank of England may increase its rates in 2017.

The U.K. is also likely to engage in stimulus spending in order to keep its economy on track in 2017, adds Hadden.

The full economic consequences of Brexit will not be felt in 2017. Although negotiations to establish terms of the U.K.’s exit from the EU are expected to begin this spring, the process will take at least two years and the delay will provide some “breathing room” for the U.K. economy, says Pépin.

Federal elections

The upcoming year will also see federal elections in France, Germany and the Netherlands. In addition, Italy may be going to the polls in 2017 as a result of the resignation of Prime Minister Matteo Renzi following a referendum in December that rejected his constitutional reforms.

Hadden doesn’t expect the populist parties to be the ultimate victors in these elections. He notes that European democracies are often built on coalition governments, typically making the taking of power difficult for a single political party.

Cool winds from the U.S. also may dampen the trade that drives Europe’s economies. “[President] Trump’s protectionist rhetoric may have an impact on European economics and European corporations,” says Pépin, who notes that 20% of Europe’s trade is with the U.S. and that Europe exports more to the U.S. than Europe imports.

However, if Trump’s determination to improve U.S. infrastructure prevails, it could be a boon to some Europe-based firms operating in the construction industry. There are some building materials that must be sourced from outside the U.S., whether or not Trump sticks to his “Buy American” rhetoric. Notes Dominic Wallington, chief investment officer and senior portfolio manager with RBC Global Asset Management (U.K.) Ltd. in London, U.K., and lead portfolio manager of RBC European Equity Fund: “It’s not just a question of domestically sourcing raw materials for infrastructure because clearly not all of the raw materials are available on a domestic basis.”

One possible beneficiary is Swiss-based Sika AG, a producer of complex additives for concrete, says Wallington.

Another, says Pepin, is Dublin-based CRH PLC, a maker of building materials that already is benefiting from a 2015 U.S. spending bill for infrastructure improvements.

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