KKR Releases Report on Europe by Henry H. McVey and Aidan T. Corcoran
April 16, 2015
Says
“Overall, we continue to advocate our thesis of focusing on sectors and
countries where the macro momentum has turned positive. However, the
bigger picture conclusion we left with is that we believe European GDP
is ‘Returning to Normality’ after several years of austerity, bank
deleveraging, and current account narrowing,”
Some high-level insights from the report include:
-
Europe remains on an economic upswing, and as such, we are now revising our 2015 European GDP forecast to 1.7% from 1.3%, against current consensus of 1.3%. We see multiple ways for growth to “win” inEurope in 2015, including low rates, cheaper oil, less fiscal drag, and a weaker euro. Our quantitative GDP model is even more bullish, suggesting 2.4% growth over the next 12 months. -
Mario Draghi has orchestrated a perfect time to launch Quantitative Easing (QE), in our view. - In terms of credit conditions, the gap between some of the Haves and the Have-Nots has narrowed.
- We spent some time listening to a few experts talk about European capital market structure. We left unimpressed. While banking union has become a reality, capital markets union remains so far an aspiration, ongoing opaqueness favors patient capital that can take advantage of arbitrary pricing and/or harness volatility.
-
Some of the well-informed macro and economic folks with whom we
spoke view China’s slowing as more of a global risk than
Greece . We tend to agree. -
Social unrest and political tension remain risks to the story. Across
Europe , we think that wage growth is likely to remain sluggish, while liberal benefit packages, including pensions, may continue to be slimmed down.
Links to access this note as well as an archive of previous publications:
- Read the latest Thoughts from the Road on KKR’s website
-
Download a PDF of
Europe , Returning To Normality - Archive of previous publications
About KKR
KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world‐class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners’ capital and brings opportunities to others through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. (NYSE:KKR), please visit KKR’s website at www.kkr.com.
The views expressed herein are the personal views of Henry McVey and
Aidan T. Corcoran of KKR and do not necessarily reflect the views of
KKR. This information is not research and should not be treated as
research. It does not represent valuation judgments with respect to any
financial instrument, issuer, security or sector that may be described
or referenced herein and does not represent a formal or official view of
KKR. It is being provided merely to provide a framework to assist in the
implementation of an investor’s own analysis and an investor’s own views
on the topic discussed herein. There can be no assurance that an
investment strategy will be successful. Historic market
trends are not reliable indicators of actual future market behavior or
future performance of any particular investment which may differ
materially, and should not be relied upon as such. This
information should not be viewed as a current or past recommendation or
a solicitation of an offer to buy or sell any securities or to adopt any
investment strategy. This release may contain projections or
other forward‐looking statements. None of
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