It's hard to imagine that news from the eurozone could get any worse. We have grown used to terrible numbers out of Greece, Italy and Spain. In the last year, France has joined its declining economies. And now even Germany is suffering.
In the latest quarter, the German economy shrank by 0.2%, partly due to Russian sanctions, and it looks unlikely to recover strongly anytime soon. The zone appears locked into permanent zero growth.
Usually, investors would avoid that like the plague. Zero-growth economies have zero-growth companies and companies that don't grow make for a stock market that doesn't grow. All shareholders have is a claim on company profits and it is very hard for businesses to make money when their domestic market is shrinking.
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In Europe, however, it might well be different. Big companies seem to bedoing fine. Fund group HendersonGlobal Investors released research this week on dividend payouts for different regions.
European companies, excluding the UK, raised their payouts to shareholders by 18% year-on-year in the second quarter, paying out a total of £90bn. That was the fastest rate of increase since 2011.
Perhaps surprisingly, French companies led the way, with a 30% jump in the amount they paid to their shareholders (President Franois Hollande will no doubt be temptedto slap an extra tax on them soon).
The performance of German dividends was more muted, but growth was healthy across the board.That was a lot better than other regions.
British dividends, usually among themost generous in the world, were up 9.7% year-on-year. North Americawas up by 11%, as was the Asia Pacific region, while emerging markets were down by 14%. Growth was strong in general global dividends were up by 11% but it was continental Europethat stood out.
This isn't as surprising as it might seem at first glance. The eurozone crisis is bad for workers, and for small companies. But it may well allow the big companies that dominate Europe's stock markets to push up their profits at a decent rate.
Why? Because their costs are falling. Wages are the biggest cost for most companies and mass unemployment is, unsurprisingly, putting a lot of pressure on what people get paid.
Take France, for example.According to rich-country think tank the OECD, real wages (ie, wages after inflation) in France were rising at a rate of 1.5% a year back in 2009 and 2010. By 2012, that had fallen to 0.2%. Or take Italy: real wages were rising in 2008 and 2009, but are now falling at a rate of 2% a year.
In Greece and Spain, meanwhile, both real and nominal wages have been falling for the past five years. In Greece, average pay is now 22% lower than it was five years ago, according to the International Labour Organization. Pay is down by 7% in Spain and by 5% in Portugal. Small wonder.
In Greece, 28% of the workforce is now jobless, and in Spain it's 24%. With such fierce competition for the few available jobs, it's a surprise that wages aren't falling even faster, rather than at the rate they're currently going down.
In a depression, other costs are going to fall as well. Industrial space won't be as expensive, because there is less manufacturing. And all the stuff that companies have to buy, from accounting services to recruitment consultancy, is coming down in price as well. That's what happens when demand falls.
But many of the major eurozone companies are big exporters. Germany's Dax index is dominated by the likes of car manufacturer BMW and engineering giant Siemens, which sell their products very successfully around the world.
So is France's CAC 40 it is the likes of cosmetics group L'Oral, aerospace specialist Airbus and food producer Danone that dominate the index. Northern Italy, too, is home to lots of dynamic exporting companies.
With the rest of the global economy in increasingly respectable shape, those companies should all be seeing healthy sales growth in the UK, North America and Asia, even if their domestic sales are stagnating.
Meanwhile, the cars and cosmetics and machine tools they are manufacturing are all going to get cheaper and cheaper to make, as wages at home keep falling, along with many of the other costs of production.
The result? Profits can keep rising strongly, at least for the big exporters, even as the European domesticeconomies go into terminal decline.And as profits rise, so should dividends and share prices.
A depression is terrible for the people living with it. Jobs are scarce and money is tight. But it can be fine for shareholders. Even if the news out of Europe gets worse, there is no reason for investors to get out there could still be plenty of growth ahead.
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