Each week, a professional investor tells MoneyWeek where he'd put his money now. This week:Mark Page, co-manager, Artemis European Opportunities Fund.
The Ukraine crisis and the threat of deflation are having an impact on European GDP. We are already seeing this in the current results season: companies' third-quarter results will, no doubt, be revised down. The consequence is that some form of stimulus is more likely, probably quantitative easing (QE), also known as money printing'.
The European Central Bank (ECB) president, Mario Draghi, used his recent speech at Jackson Hole to assure investors that he would not sit idly by.
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Draghi faces scepticism regarding QE from some, and outright opposition from Germany. Draghi famously promised to do "whatever it takes" to save the euro. His most recent move was to announce a non-financial-sector asset-backed securities' (ABS) purchase programme, rather than outright QE.
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Investors will have to wait and see how successful the ECB is at expanding its balance sheet in this way, especially given the current small size of the investment-grade ABS market in Europe.
Moving away from the macro side of things, here are three of the better opportunities to which we have committed our clients' money. Most recently, we have added Germany's Brenntag (Frankfurt: BNR). It is the global leader in the (very fragmented) third-party chemical-distribution sector.
Chemicals producers can't meet the needs of small customers. Brenntag, which has come a long way from selling eggs in 1874, allows supply to meet demand for a fee.
The company focuses on small customers for whom reliability and flexibility are as important as price. The result? A very profitable and resilient business. The shares offer good growth at an attractive price.
My second firm is an initial public offering that hasn't been dressed up by private-equity sellers. Financial services group ING has been forced by the European Commission to spin off its insurance arm, NN Group (Amsterdam: NN).
Regulators have made sure the insurance group is well capitalised and that its assets and liabilities are perfectly matched. Now new management is implementing an ambitious cost-cutting plan.
With part of its operations in run-off mode, this isn't a growth stock. But at 0.5 times book value, with the potential to return cash to shareholders, the valuation was too attractive to ignore.
We've also made an investment in thefast-changing payments sector. Atos, the French IT services firm, recently spun out part of a division that manages card payment transactions, mainly in Europe.
The companyis called Worldline (Paris: WLN) and welike the fact that Atos has retained a majority shareholding in the business. Most of the payment-processing business in Europe isstill done by banks and the reality of aregulator clamping down on charges is encouraging divestment of what is (for a bank) a non-core operation.
Worldline also provides payment systems (payment gateways and terminals) and customised transactions for larger institutions (eg, governments/transport companies) for example collecting finesand e-ticketing.
So we have one company with an element of cyclicality, an insurer at the right price and a software company in a fast-changing environment. Europe constantly produces a diverse list of stocks and, we think, very attractive opportunities regardless of whether we have a bull or bear market.
