Reddit Boom Shook Europe

The recent reddit boom shook the Europe. However, analysts say it is a bubble and it will burst soon enough.

Social platform Reddit, which came up with the GameStop incident, which fell like a bomb on the US stock market recently, also created a big storm in European stock markets. However, the appreciation in European stock markets left its place to a decline. As a result of near-record-breaking valuations in equity transactions in Europe, analysts began to talk about the risk that this could be a "bubble". The recent surge in stocks came on top of the nearly one-year rise in stocks and corporate bonds, fueled by the incentives of Central Banks and governments fighting the economic effects of the coronavirus epidemic. Valuations increased as market actors who needed such an upswing due to the coronavirus outbreak turned to risky assets, and Europe laid the groundwork for a retreat that could jeopardize the recovery of the region. Kasper Elmgreen, President of Amundi Stocks, said: “Their division of markets has increased significantly above fair value. Gravity is a powerful force, no matter how high valuations are, bubbles will eventually burst.” European stocks are trading with 17 times futures earnings, nearly 14 times their 10-year average. With the ups and downs of the markets, the shares of companies such as Gamestop and Nokia Oyj also decreased. Analysts and investors say this is an indication that the market is getting too hot. Lars Kreckel, Global Stock Strategist for Legal and General Investment Management, says: “Increased participation in stock markets is a typical side effect of bull markets and bull markets turning into bubbles.”       Source: Bloomberg HT