Southern Europe has significant recovery potential – Generali
François Gobron, manager of the GIS European Equity Recovery fund, remains confident regarding the situation of Southern European equities.
The GIS European Equity Recovery strategy invests primarily in equity securities issued by companies listed on Southern European markets, with Spain, Italy, Portugal and Greece representing 99% of the total equity invested.
In his latest market view, Generali Investments’ Gobron said he believes Southern Europe has a significant recovery potential.
“Clear signs point in that direction, including the economic growth in Spain and a rapidly rising employment in Italy.
“Furthermore, as companies in Southern Europe still trade at lower earnings multiples than their European peers, we believe their potential to outperform is meaningful,” he commented.
Gobron said the fund will benefit from the re-rating of Southern European markets as soon as confidence in the macroeconomic environment is fully restored.
“Companies in Southern Europe still show higher upside potential relative to their European peers as the local financial markets have not fully recovered yet from the 2008 and 2011 crises and valuations remain lower on a relative basis”, the fund manager added.
The GIS European Equity Recovery fund favours companies with strong operational leverage and large restructuring potential.
It invests in companies that offer at least a 50% upside potential in terms of total return on a 3 to 5 years’ period.