The UK is expected to wrap up the whole Brexit matter that lasted for more than 3 years and hold their general elections on 12^th Dec 2019. The latest polls showed that the Conservatives will likely get around 43% of votes, which is expected to translate to a majority in the parliament. The Cons are poised to regain control of the parliament, the “Johnson Deal” approved by the EU will likely pass though the parliament. A timely Brexit stemming from this will likely further clear up the situation in Europe, politicians can finally move on to more fundamental issues with the economy, climate, society, and so on.

As for fundamentals, the valuation of the European equity markets has been catching up recently, with forward price-to-earnings ratios closing in of that of US equities. With uncertainties cleared, we expect European equities to extend further gains in the short to mid-term via valuation recovery. Yet, the fundamental issues of the economy stays unresolved. Eurozone manufacturing PMI remained in the contraction zone for ten consecutive months, while the German Manufacturing PMI continued to improve, it still stayed in the contraction zone. The Euro Area Economic Sentiment Indicator, a leading indicator of Eurozone economy, slightly recovered to 101.3 in November, it remains to be seen if the downtrend since late 2017 could be reverted. As the fundamentals in the European economy remained weak and showed no visible signs of recovery, we could see a visible but limited upside for the European markets in the short to mid-term.