TR European Growth Trust manager Ollie Beckett sees “real hope”
Ollie Beckett, manager of the closed ended TR European Growth Trust believes there is “real hope” for positive returns from equity markets in Europe in 2012 despite the ongoing eurozone crisis.
As we have entered the New Year investors have realised the world is still turning, with the US seeing early shoots of recovery and the emerging markets continuing to grow. The European Central Bank has at the very least delayed a banking crisis with the Long Term Refinancing Operation Liquidity scheme. We, like others, expect Europe to continue to provide a muted economic backdrop, particularly with the German inspired ‘fiscal compact’. Despite that, we think there are a large number of European smaller companies on attractive valuations that can benefit from growth outside of the region.
The Eurozone still has a need for greater integration and a redistribution of wealth across the region. It still remains unclear how Greece will be a ‘one off’ and whether it can remain within the Eurozone. The ‘fiscal compact’ is a very necessary stage one but ultimately must be followed by a growth stimulus. Anything else is neither socially acceptable nor politically viable. People, especially the young, must be given hope. However, the policy response is gradually moving in the right direction (towards growth).
However, 2012 does offer hope for equity markets with the backdrop of low interest rates, quantitative easing, the likelihood of increasing mergers and acquisitions, strong corporate balance sheets and attractive valuations. It is unlikely to be a smooth ride but I remain cautiously optimistic about the months ahead. We can find exciting new ideas to make money for our investors.