Euroland equities: beneficiaries of Brexit uncertainty?

04/10/2017

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Is Brexit uncertainty good for Euroland-focused value managers?

In the short term, Brexit uncertainty is good for the eurozone. In the sense that there should be a migration of higher-margin jobs away from the UK and towards the continent, and markets should anticipate that. Longer term, the value opportunity may turn out to be in UK stocks, but that is probably at least two years away, when Brexit is finally sorted out.

Value vs growth: where do we go from here?

One of the reasons that growth has performed so well over the last nine months has been the decrease in volatility in markets. Decreasing volatility allows investors to look further out, extending their time horizon, on the assumption that what they have seen in the recent past is what they will see two years further out. There is a saying in markets that if someone tells you this time it will be different, don’t believe them. I have yet to see conditions in markets where volatility remains this low for very long. So I think it is unlikely that growth will continue to outperform at quite the rate it has.

Where are you finding value?

I am finding value in the market where other people are selling, because of fear and greed. So at the moment, I am seeing opportunities in financial stocks, automobile manufacturers and equipment suppliers to automobile manufacturers.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

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Anything non-factual in nature is an opinion of the author(s), and opinions are meant as an illustration of broader themes, are not an indication of trading intent, and are subject to change at any time due to changes in market or economic conditions. It is not intended to indicate or imply that any illustration/example mentioned is now or was ever held in any portfolio. No forecasts can be guaranteed and there is no guarantee that the information supplied is complete or timely, nor are there any warranties with regard to the results obtained from its us.


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Janus Henderson Horizon Euroland Fund

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  • Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
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  • If the Fund or a specific share class of the Fund seeks to reduce risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or detrimental.
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