European equity managers discuss the next big investment opportunities across the continent

An hour watch. 

A dislocated mishmash of ‘old economy’ stocks, or a dynamic diversifier away from bloated tech stocks? Expert stock pickers took on the realities and misconceptions of investing across European equities in our latest Hot Topic event with some fascinating insights.

Chair Ben Yearsley of Fairview Investing dived straight in echoing an ingrained view from some investors that the US an Asia are seen as much more exciting opportunities, particularly when it comes to booming growth stocks.

While agreeing that Europe is indeed not home to the trendy tech names that have powered the post-lockdown rebound, Nick Williams, head of small cap equities at Barings, nevertheless points to the continent as a world leader in very different areas.

“The assertion fails to recognise that Europe is a world leader in some of the new forms of technology such as renewable energy and other environmentally related sectors,” he explained.

“These are at the beginning of their growth paths, whereas US tech is much longer in the tooth. From this perspective, you could argue that Europe’s smaller technology companies are more exciting”.

Exciting potential

Russell Champion, co-portfolio manager on RWC Partners’ European offerings, talks of a much more nuanced reality from the black and white old versus new economic view. He sees Europe as home to leaders not just in environmental sectors, but also in areas like financial software and engineering software.

“These are niche areas where innovative young companies have either built or are rapidly building very impressive and profitable businesses,” he explained.

“Europe also has a lot of strong, innovative consumer staple brands and medical technology companies. These are our key focus areas, and we are finding plenty of opportunities that more than match the US and Asia for excitement and growth potential”.

For Mark Denham, head of European equities at Carmignac, the whole fact that Europe isn’t seen as a “sexy” place to invest, is because it hasn’t delivered a massive success from the internet boom, like a Google or an Amazon. However, he echoed Nick’s views on exciting opportunities in renewables.

“There is a new mega-trend underway now and it is one in which Europe leads the world. That mega-trend is renewable energy and Europe has two of the three largest wind turbine companies in the world, with Siemens Gamesa and Vestas,” Mark said.

“The only way to invest directly in offshore wind farm development is through the Danish company, Orsted and there are several solar energy developers too. So, there are many, many pieces to the European equity jigsaw puzzle, from which investors can construct an exciting portfolio”.

You can watch our guests discuss plenty more topics, including the future of the eurozone and ESG, in a replay of the event below.