The financial services provider said European equities are now underperforming cash, gold, local bonds, international bonds and international equities.
Gavekal chief operating officer Louis Vincent Gave said the investment dollar in Europe is more often than not momentum-driven and chases performance.
“That’s because it is usually provided by the retail investor, and retail investors have a long track record of being momentum jockeys,” said Mr Gave.
Certitude Global Investments chief executive Craig Mowll said he has seen this trend among Australian investors, with the Certitude monthly investment index indicating strong sentiment towards Asia.
“Asia was one of the few regions to stand its ground when investors were asked which international markets they were most keen to invest in over the next 12 months,” said Mr Mowll.
“Most other major markets saw a decline in investor appetite.”
Both Mr Gave and Mr Mowll warned, however, there are widespread differences between the emerging markets within Asia.
While Mr Gave said there was a high correlation between Asian equity markets in 2003, this “correlation has since loosened tremendously”.
“China, Hong Kong and South Korea have been underperformers as growth in China has decelerated,” he said.
“Meanwhile, political developments in India, the Philippines and Indonesia have been drivers of the markets.”
Mr Mowll said Certitude’s monthly investment index indicated investor interest was down slightly, while in India and Japan it was on the increase.
“The balance of payment surplus and good inflation levels in the Philippines will also make this a stand-out for investors,” said Mr Mowll.
Mr Gave said investors should concentrate their portfolios on “strong conviction ideas to add more value”.
“If we look at Chinese internet stocks versus state-owned enterprises or Japanese banks versus exporters, these are clear cases in point,” he said.
