How to invest in the Euro market
Investing internationally can be a great way to diversify your portfolio. It helps you gain exposure to large global companies, as well as sectors which aren’t always well represented on the Australian market. Investors often head straight to Wall Street if they want to establish an international portfolio, but don’t dismiss the opportunities on offer in Europe; many investment banks are forecasting European stocks will outperform the US market for the rest of the year, and into 2022.
Here’s how to start trading in European stocks:
1.Understand the market
There’s plenty of growth happening in Europe at the moment. The STOXX Europe 600 tracks the performance of 600 stocks in 19 European countries, and so far this year it’s climbed over 14%. The French Index has gained around 32%, and the Dax around 25%.
Although the Euro zone has lost some momentum during August, it remains on track for a strong third quarter-growth, and analysts believe this could extend through to the end of the year, making now a good time to invest.
2. Have a plan
Before you invest in any market, it’s important to have a strategy. Doing your own research is essential to understand general market conditions, and the performance of individual companies or ETFs. If you need further insights, eToro’s social news feed is a personalised feed that helps you follow financial investors you like, as well as interact with other eToro community members, so you have a wealth of information to hand before investing. If you feel unsure about investing straight away, eToro also offers a demo account with virtual funds so you can practice trading, and a CopyTrader programme where you can view what real investors are doing in real time, and copy their investments automatically, without any additional fees.
3. Don’t stick to one exchange
Investing in Europe means you can trade across a range of exchanges, offering up more opportunities. Euronext is the largest exchange in Europe. Available on eToro, it operates exchanges in Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris. eToro also offers investing on the NASDAQ’s Nordic and Balctic exchanges, as well as SIX Swiss Exchange, the London and Frankfurt exchanges, as well as CFD trading on the Milan, Helsinki, Oslo and NASDAQ Copenhagen markets.
4. Consider ETFs
Exchange Traded Funds (ETFs) are a great way to enter a new market. By buying into an ETF who does its business in Europe it allows you to reap the benefits of widespread diversification, cost-effectively. Because ETFs give instant access to a wide range of markets, they’re a great way to dip a toe into a foreign market in a transparent and easy to manage way. eToro currently offers 0% commission on opening and closing ETF positions.
5. Look at trends
Luxury European retailers are performing well after coming out of lengthy lockdowns. Moët Hennessy Louis Vuitton (LVMH) is up 32.55% and L’Oreal is up 23%. As travel restrictions ease across Europe, look to airlines such as easyJet and Ryanair that are set for serious growth as people take the holidays they’ve been waiting to go on for over a year. eToro is currently offering 0% commission on European stocks.
Disclaimer: Investing in stock markets involves the risk of loss.