This is Rich Winkowski, Senior Portfolio Manager from the Federated Hermes International Equities Group.
Will the economic recovery in Europe lag and affect investing opportunities there?
Europe's economic recovery has definitely been delayed but not canceled. As a result, the recovery period of some of our investment opportunities has been further extended. It is true that we've not seen a full recovery in Europe compared to the recovery in the US economy, primarily due to the poor vaccine rollout in Europe. Currently, the overall European vaccination rate is about 15% versus 40 to 50% in the US and in the UK. However, the vaccination rollout is accelerating, and the European Commission expects 70% of the at-risk population to be vaccinated by the end of June. That doesn't mean that the European economy isn't recovering in a meaningful way. For example, the manufacturing sector, which is a major component of many economies in Europe, has bounced very strongly on the back of growth in China and the United States. For example, in March the Eurozone Manufacturing Index came in at 62.4%; strongly in expansion territory. On the other hand, the Eurozone Service Manufacturing Managers' Index, which measures the activity level of purchasing managers in the service sector, has been creeping higher but still not above the key level of 50 which marks expansion. However, as the vaccine rollout accelerates in Q2 in Europe, we think our investments in the service sector, such as hospitality, retail, lodging, and travel, all related to the reopening trade, will catch up with our investments already benefiting from the strong manufacturing recovery in Europe.
Disclosure: Views are as of April 16, 2021 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Past performance is no guarantee of future results. International investing involves special risks, and differences in auditing and other financial standards. Federated Global Investment Management Corp. 21-10067 (5/21)