Global markets approach inflection point, says SVM’s Veitch

Investors will shift focus to value stocks as global markets hit an inflection point, says Neil Veitch, manager of the SVM World Equity fund.

Veitch (pictured) said: “Investors are now likely to become more focused on valuations.” He believes this will “provide a boost for those stocks that have been left behind” so far this year, as investors have flocked to higher quality names in their search for safety.

But, Veitch is convinced this safety is a perceived one. He points to this year’s performance of cyclical names, which have lagged behind defensive titles year to date.

That said, it is not all bad news for cyclical names. As investors have shunned these stocks, some company valuations have dropped to attractive levels. Yet these companies still have strong fundamentals, making them attractive to investors.

Many of these opportunities can be found in Europe, says Veitch, whose fund seeks out stocks trading at a discount to their intrinsic value.

Jens Ehrhardt of Munich-based wealth and asset manager DJE Kapital, shares his view on European equities.

Back in April, he said the sovereign debt crisis had left European equities attractively value and there were “many bargains to be had looking at current valuations of many stocks.”

Like Veitch he is positive on cyclical names, and believes they will profit from global megatrends, such as increasing consumption and demographic growth.

Robeco’s CIO for Asia Arnout van Rijn also pointed to emerging markets as a source of cheap stocks.

Speaking at the firm’s recent conference in Madrid, he said that although emerging markets proved to be a tricky investment between 1994 and 2000, today they provide an interesting investment destination compared to Europe and display superior macroeconomic performance.


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