Tickers in this Article: EWL, EWG, PLND, GXF, FEZ, EWP, FXF, EPOL, EWQ
Lingering concerns over the fate of the Euro and European Monetary Union are still having their effects on the market. Aside from the known debt problems in countries like Spain - iShares Spain Index (NYSE:EWP) - and Greece, places like Hungary have recently stepped up to the bailout asking for help restructuring their debt. Austerity plans, rising taxes and vastly reduced federal budgets are beginning to take shape, and investors fret about contagion spilling over to the rest of the world's economy. However, investors shouldn't count Europe out completely. Long term bargains are beginning to emerge and investors can seek shelter in individual European nations.

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Europe's Getting Cheap
Aside from the $1 trillion bailout package proposed by European Union and International Monetary Fund, the European Union seems to be addressing the underlying causes of its deficits. In the short term, these austerity plans will impact GDP, approximately a 1.5% reduction according to analysts' views. But, over the longer term, these measures will ultimately strengthen the monetary block. In addition, the European Central bank began purchasing euro-zone national bonds on the secondary market, while our own Federal Reserve re-activated swap lines in order to help foreign institutions get access to credit. So far no country in the E.U. has defaulted on its bonds and a recent debt offering from Spain was well received from investors.

Overall, European stocks look cheap on a P/E basis with their American counterparts. The average P/E for the S&P 500 was around 18, for the Euro STOXX 600, its closer to 15. A low Euro is also benefiting exporters, which will help to cushion the budget cut measures. Analysts estimate that for every 10% drop in the Euro could add an extra 0.5% to GDP for the Euro Zone. While the future still looks hazy and there is much debate over whether or not these efforts will pay off, some investment professionals are saying that current events to date aren't pointing to another global financial disaster and that Europe represents a major value proposition.

Where to Look
Europe is a complex continent, with each nation having its own identity, strengths and weaknesses. Investors may want to skip broad based exchange traded funds like the SPDR DJ EURO STOXX 50 (NYSE:FEZ) and focus on some of the stronger stories in the region.

A falling Euro means big advantages for Germany. As one of the most financially sound nations in the EU, Germany thrives on selling abroad and export data has continued to be positive in 2010 with regards to the weakened Euro. According to the OECD, the German economy is expected to grow 1.9% in 2010, despite the continent's woes. The iShares MSCI Germany Index (NYSE:EWG) tracks over 50 different export heavy German companies, including Siemens (NYSE:SI) and software giant SAP (NYSE:SAP).

Offering Europe exposure beyond the euro currency, small but economically powerful Switzerland might be an ideal play. Hallmarks of Alps nation include a strong currency, low foreign debt and an abundance of gold reserves. Like Germany, nearly 40% of Switzerland's of gross domestic product is attributed to global exports and the nation currently runs a trade surplus. Investors can bet on Swiss equities through the iShares MSCI Switzerland Index (NYSE:EWL) or its strong currency, the Franc, via the CurrencyShares Swiss Franc Trust (NYSE:FXF).

For investors wanting to add more risk to their European holdings, Poland offers a chance to participate in one of its faster growing emerging markets. The nation's close ties with Germany will help it in any future economic recovery. Poland was the only member in the European Union that saw its GDP grow in 2009 and the OECD expects the nation to grow by 3.1% in 2010 and 3.9% next year. In addition, Poland is not burdened by the euro currency and can adjust its monetary policies at will. Investors can access Poland through the Market Vectors Poland ETF (NYSE:PLND) or the newly launched iShares MSCI Poland Investable Index (NYSE:EPOL).

Bottom Line
There is still much uncertainty surrounding Europe and the fate of its monetary union. However, the crisis has begun to unearth some interesting bargains in some nations. Germany, Switzerland and emerging Poland offer some of the more interesting stories for you investment dollar. These plus some of the Nordic nations contained within the Global X FTSE Nordic 30 ETF (NYSE:GXF) are ways to play Europe outside the euro. (For more, see our Forex Walkthrough.)

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