'There is great potential in European luxury and healthcare stocks'
Europe offers investors brands such as Ferrari or Hermès, while in pharma there are very innovative companies such as Novo Nordisk
3' min read
Key points
- In Europe there are great historical quality brands; will European equities be affected by the trade war with China? What are the most interesting sectors and brands?
- What specifically are you focusing on and how can the European market make a difference in competing with the US market?
- The titles you like best right now?
3' min read
An exposure to the US market could be an effective move, while in sector terms, luxury is attractive because it can offset possible Chinese trade retaliation. Here is a summary of some of the variables outlined by Pierre Lamelin of Comgest, a 100% employee-owned management company that manages assets of €29.2 billion.
The political theme in Europe after the recent elections is now more focused than ever on the US and the new scenario ahead of the presidential elections in November. What will be the impact on European stock markets?
Generally, it is always fundamentals that trump politics. The real political trigger however remains the US and Trump, who if he wins the race with Harris and is elected will want to massively reduce corporate taxes and this will attract investment to the US if combined with the Inflation Reduction Act.
So what?
.Therefore, it is better to have companies with strong US exposure in the portfolio.
In Europe there are great historical quality brands; will European equities be affected by the trade war with China? What are the most interesting sectors and brands?
We are not exposed in the OEM segment, i.e. automotive original equipment manufacturers, for which the risk of retaliation is high after the EU decided to impose import duties on Chinese electric vehicles. We are exposed to luxury and beauty brands. The most prestigious and regionally diversified brands will be the most protected. The luxury sector remains exposed to China, but it is also one of the most successful European sectors in the US market, which can offset Chinese trade retaliation. We are less concerned about a trade war with China because our quality companies do not sell mass-market or consumer products that would encourage retaliation from China.
Tech has recently taken centre stage with the boom in artificial intelligence. Is this trend set to deflate or will it continue to drive the stock markets?
Artificial intelligence is boosting all sub-segments of the technology sector, i.e. semiconductors (Asml), software (Sage, Sap, Dassault Systèmes Se), database providers (Relx, Experian) and even industrial groups (Schneider Electric).
