He says: “Younger people in emerging markets tend to like premium spirits, and European listed companies are the leaders there.”
John Surplice, co-head of European equities at Invesco, agrees that luxury goods is an area of the market where companies in the economic bloc are strong, but adds that he feels the positive news from such trends is already reflected in valuations. As a result, he has little invested in that part of the market.
Instead he says that many of the companies in Europe have suffered in share price terms in recent years as a result of inflation being very low, but that the waves of extra spending by governments, coupled with very low interest rates, could mean that a feature of the future economic landscape is that inflation is much higher in the years ahead than it has been for the past decade.
He says in such a scenario, eurozone shares in areas such as utilities would perform well as they have revenues linked to inflation, and, with inflation being very low, the shares of those sorts of companies have suffered in recent years.
And then there is Covid-19 to consider – a response to which might help boost European pharmaceuticals. Ben Peters, who runs the Evenlode Global Income fund, says many European pharmaceuticals are global leaders and demand is unlikely to fall in the years ahead.
So while Europe might have an image problem, a little closer look will show some rather attractive stocks.
David Thorpe is special projects editor at Financial Adviser and FTAdviser
