Henderson: European Stock Market Will Fall 10%

It is time to stop bashing Europe stocks says Silver Rated investor Tim Stevenson, after a much needed correction there will be plenty of growth opportunities

Emma Wall 20 October, 2016 | 4:11PM
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Investors should prepare for a 10% fall in European stock markets, warns Henderson fund manager Tim Stevenson – but careful stock selection now can weather the correction and deliver growth over the long term.

Negative sentiment is putting investors off European stocks. Concerns about European Central Bank stimulus, upcoming elections in France and Germany and low economic growth for the region mean that investors are shunning European funds. Many high-performing trusts are trading on a discount to net asset value; Jupiter European (JEO) has a five-star performance rating but is trading on a 6.5% discount, Fidelity European Values (FEV) has a four-star performance rating but a 13% discount and Stevenson’s five-star Henderson EuroTrust (HNE) is trading on a 9% discount to net asset value. Considering it has a five year annualised of 17% this is good growth on the cheap.

So are investors right to be cautious? Stevenson suggests investors have been put off by the threat of political turmoil, but points out that the last German and French election had little impact on stock market returns. What has impacted markets – both bond and equity prices – is the volume of quantitative easing flowing from the ECB.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Banco Bilbao Vizcaya Argentaria SA5.67 EUR0.00Rating
European Opportunities Trust829.00 GBX-1.31Rating
Fidelity European Trust Ord314.50 GBX-1.26
Henderson EuroTrust Ord1,505.00 GBX-0.66Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar

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