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Europe ETFs That Braved First Monthly Fall Since March

The pan-European Stoxx 600 lost about 2.5% in July, marking its first monthly decline in four months. The loss stemmed from downbeat GDP data and corporate earnings. The Euro zone economy shrank 12.1% in the second quarter of 2020, compared to a decline of 3.6% in the first three months of the year, according to preliminary data from the region’s statistics office.

On the other hand, shares of banking giant HSBC Holdings Plc (HSBC) dropped after it reported a 77% drop in first-half net profit. Societe Generalereported a 1.26-billion-euro loss for the second quarter.Also, BNP Paribas reported a net income decline of about 7% year over year for the second quarter.

What Lies Ahead?

However, stocks are likely to gain ahead as the key pandemic deal is signed. After a tough negotiation, European Union leaders agreed on a massive (750 billion euros) stimulus plan for their coronavirus-shattered economies in one of the longest EU summits in history in late July.

Initially, there were big differences on the allocation of the stimulus between grants and loans.At the meeting, the leaders agreed to distribute 390 billion euros, out of total 750 billion funds, in the form of grants — down from the 500 billion euro grant initially proposed by France and Germany in May. The EU agreed to repay all of the new debt by 2058. Meanwhile, member states will also have to come up with plans on how the new funds will be invested.

Moreover, the ECB restarted QE from November 2019 and has a negative interest in place. In April, finance ministers had already approved a 540-billion-euro package of short-term fiscal stimulus. Plus, the individual governments announced their individual economic stimulus packages. All these measures should favor Europe stocks in the coming months.

Not All Europe ETFs Fared Badly in July

Investors should also note that not all Europe ETFs underperformed in July. There are products that have beaten the S&P 500 (up 3.7%) in the past month (as of Jul 31, 2020). Below we highlight all those Europe ETFs.

iShares MSCI Sweden ETF EWD – Up 7.3%

Global X MSCI Norway ETF NORW – Up 7.2%

Global X FTSE Nordic Region ETF GXF – Up 6.8%

iShares MSCI Finland ETF EFNL – Up 6.8%

iShares MSCI Denmark ETF EDEN – Up 6.5%

First Trust IPOX Europe Equity Opportunities ETF FPXE – Up 4.8%

iShares MSCI Ireland ETF EIRL – Up 4.7%

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Global X MSCI Norway ETF (NORW): ETF Research Reports
 
Global X FTSE Nordic Region ETF (GXF): ETF Research Reports
 
iShares MSCI Ireland ETF (EIRL): ETF Research Reports
 
iShares MSCI Sweden ETF (EWD): ETF Research Reports
 
iShares MSCI Denmark ETF (EDEN): ETF Research Reports
 
iShares MSCI Finland ETF (EFNL): ETF Research Reports
 
First Trust IPOX Europe Equity Opportunities ETF (FPXE): ETF Research Reports
 
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Zacks Investment Research
 
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