We have no lack of confidence in corporate Germany. In fact, we are markedly positive about the many company opportunities that we see in today’s market. Germany’s industrial sector is an exporting powerhouse that has long been the envy of its neighbours and the VW issue alone is not going to change that.
While there has been some concern about the impact of a China slowdown on German exporters, our company research and the conversations we are having with corporate managers lead us to believe that such concern is disproportionate to the actual threat. We note that many German companies have expanded in China even amid the economic slowdown.
In the meantime, business activity in Germany and in wider Europe is showing signs of strength not evident in years. In this environment, we will continue to look beyond any short-term volatility and to invest in companies that we believe offer the greatest potential to deliver outperformance over the longer term.
While we do not expect significant market weakness ahead, such an event may present further buying opportunities. We favour companies that possess quality management, solid balance sheets and strong franchises. In addition, we look for opportunities that offer attractive earnings growth and healthy upside to current valuations. And from our vantage point, there continue to be many such opportunities in corporate Germany today.