European QE2 boost for share market
On the back of weak economic growth and very low inflation, we expect the European Central Bank to announce a substantial increase in the Quantitative Easing Program at its meeting on 3 December. The potential policy announcements encompass a 20 basis points cut in the deposit rate to a negative 0.4% and an expansion in asset purchases from €60 billion per month to €75 billion per month accompanied by a 6 months extension to March 2017. Furthermore, additional monetary policy loosening remains likely during 2016. History suggests that the European share market should experience a very favourable impact in the wake of such announcements over the coming months. In our latest issue of Lose the Home Bias (attached), we take a look at six high-quality European companies aligned to the potential policy announcement.
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