Live Markets: Europe's structural challenges

Geberit AG

19/08/2026 11:28

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EUROPE'S STRUCTURAL CHALLENGES
Europe is looking more interesting to investors as they look to diversify away from the U.S. - but the region is "structurally challenged" for two key reasons, according to Mike Bell, head of market strategy at RBC BlueBay Asset Management.
The first challenge is Chinese competition, especially in autos, Bell noted.
"If you look across Germany, France, Italy, and Spain, there are currently 20 factories which are operating at below 60% capacity. That suggests to me that there's risks of further job cuts coming in Europe because they struggle to compete with China," he said. 
The second challenge pointed out by Bell is around demographics. 
"The working age population in Germany, Italy, and Spain is set to shrink quite meaningfully over the coming years. If you're a European bank in one of those countries, then the simple question I have is, who are you going to lend to?"
Looking beyond Europe might therefore be a good idea for investors seeking to diversify away from U.S. risk, Bell said.
It makes sense to "look to the emerging markets, both within China, but selectively, within the broader emerging market equity indices, but again, being very active, and also extending one's horizons into emerging market debt that has historically been able to outperform in periods where equities and particularly tech stocks have struggled," he concluded.
     
(Sophie Kiderlin)
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