While bond markets appear to have discounted a double dip and the likelihood of deflation, equity markets remain torn between the “double dippers and the typical year two slowdown camp,” Invesco’s European equity experts write in their latest monthly summary for September 2010.
They continue to believe in muted but sustained growth, and see plenty of bottom-up opportunities for investors willing to look beyond the current volatility.
Invesco’s Henley European Equity Team is currently overweight in the Dutch market, in particular.
“While our overweight position in the Netherlands around seven per cent is more of a reflection of the bottom-up decisions than the top-down, the open, outward-looking nature of the economy contributes to its attractiveness for the team,” says Luke Stellini, European product director at Invesco in Henley.
His team has identified investment opportunities in a breadth of sectors including energy, consumer goods, financials, telecoms, technology and mining.
“Beneath a layer of the higher profile, larger cap stocks sits another layer of smaller, but equally diverse and attractive opportunities,” says Stellini. “Almost all of these businesses are internationally focused.”
According to Stellini, the diverse Dutch market thus currently offers investors good access to a broad range of attractive defensive, cyclical and restructuring plays. His team’s analyses indicate that many of these companies are currently valued at levels that do not reflect their prospects.
“In our view, the Dutch market reflects the open nature of an economy steeped in the traditions of and heavily exposed to open trade,” says Stellini. “This breadth together with a corporate culture more in tune with the norms of open market corporate governance and shareholder treatment makes for an attractive investment backdrop.”