David Stubbs, head of client investment strategy for EMEA at JP Morgan Private Bank, is rather more keen on France, where the recently-elected president Emmanuel Macron is helping French firms.
He explains: “Compared with other European countries, it has a higher weighting to domestic companies and it is in a prime position to benefit from the uptick in economic activity.
“We are seeing President Macron making progress, and his reforms have the potential to boost the earnings growth of French companies.”
The fortunes of Europe’s companies are closely tied to the currency, which may be a headwind in 2018.
James Rutherford, co-head of investments for European equities at Hermes Investment Management, acknowledges it has been something of a “perfect storm” for European companies recently.
He explains: “I don’t know what the earnings growth forecasts are for this year, but they were north of 10 per cent and they’ll probably stay around 10 per cent and that’s the first time in 10 years that the earnings expectations are being met.
"It’s very broad based, so most parts of the market are actually growing, which is very unusual.
“The one caveat I would put on that is obviously global growth can be upset by any sort of factor, be it terrorism, currency moves, natural disasters. So you have to bear in mind that there are risks still out there to this particular picture.”
He highlights one of those risks in particular – the euro.
Figure 2: Euros versus US dollars
Source: Datastream, Rathbones
“I think perhaps where people are being quite sanguine about is the effect of the euro move against the dollar and having been a benefit coming into this year, a tailwind to earnings, it does provide a headwind now and we’re beginning to see that in corporate results,” he cautions.
“So your headline earnings are being somewhat cut going into next year and that remains a risk.”