Looks like European stock market will go through slump again.

1. It's not just Italian populists

Problem from Italy raided global markets, not just European, during a last few days.

As we all know, problem of instable Italian government securities could be widen to other vulnerable government securities, including Spain, Portugal, Greece and even United Kingdom which is hugging the slowest real economic situation from worries for Brexit.

German and France aren't safe places too.

Their lenders are exposed to the problem more than their counterparts of US.

We can see Deutsche Bank and BNP Paribas were plunging, and their recoveries in now are much weaker than those of JP Morgan chase and Bank of America Merrill Lynch.

2. Slowing real economic momentum

Early this year, global banks like J.P. Morgan, Morgan Stanley, Deutsche Bank or BNP Paribas recommended investment on Europe.

Their main grounds were attractive valuation and economic fundamental.

Attractive valuation still exists even though Japan got better one.

But, looks like their economic momentum couldn't reach the expectations.

ECB has been worrying about indices which have kept showing weaker than expected, even if their confidence appear in recent sentences.

Today, DIHK published to lower their forecast for German GDP growth rate from 2.7% to 2.2%.

Turbulent Italy and UK (plus Turkey) will be giving intermittent hesitancy to participants in the zone's economy, and serving as pressure to its upside.

3. Quantitative Easing of Europe wasn't effective to their stock market, unlike those of US or Japan were

Huge QE led by ECB proceeding during whole 2016 wasn't that effective to their stock market.

 

The central bank was providing huge liquidity to the markets during whole last year, but rising rate of EUROSTOXX50 was 6.49%.

It's much lower than 19.42% of S&P500 or 19.10% of NIKKEI225.

Some players are asserting that period of ECB's QE would be expanded, and the liquidities from additional policy could limit downside of the stock matket.

But if we see result of last year, there isn't a chance for limiting downside with QE.

4. My conclusion is that it would be better to look for US or Japan in this year

If their economic momentum is strong enough, turbulent political issues couldn't cap growths.

But, their momentum is becoming slower obviously.

Political difficulties in the situation, which could be related to system of EU, do not help at all.

Besides, the strange weakness of region's stock market is giving another headache to the investors.

It could not plunge if the US market is supported very well.

But I assert that its upside is very limited, and downside risk is too big.