The jewel in the investment crown

Article Abstract:

European stock prices have performed well in the two years to May 1998, and have been helped by low inflation and the growth of profits. European monetary union (Emu) looks set to help boost stock prices because bond yields are set to drop, the equity risk premium will be reduced, and demand for equities looks set to rise, especially as private sector savings for pensions will be increased. There are still risks involved in this market, and companies may not respond to Emu by restructuring as much as some investors hope.

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The equity risk of the single currency

Article Abstract:

British investors may be attracted to European stocks with the advent of European monetary union (Emu) but there are risks involved. The Emu area has a new monetary policy and a new authority to deal with this policy, the European central Bank. UK investors could also face exchange rate risks as a result of possible volatility of the new euro currency.

Western Europe, Economic policy

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