The French are leading the European market when it comes to corporate restructuring. That at least i...
The French are leading the European market when it comes to corporate restructuring.
That at least is the view of Norwich Union Investment Management and Edinburgh Fund Managers, two groups now overweighting France as a by-product of pan-European sector investing.
The French market, which makes up 13.9% of the FTSE World Europe Index, offers strong stock specific options across the major European sector trends, according to both groups.
Iain McNeill, investment manager at NUIM says French equities are well positioned in the fastest growing areas of the global economy such as media and telecommunications. The companies in those sectors are taking a much more international approach to business through joint ventures and acquisitions.
Examples include Vivendi's joint venture with Vodafone to provide mobile internet applications for cellular phones, and e-commerce consultants Cap Gemini's merger with Ernst & Young, both deals which open vital growth potential in overseas markets.
McNeil says: "French firms used to be focused very firmly on their own markets but now they are becoming more and more international and are building good positions across Europe and the globe."
McNeill says the only clouds on the horizon are those that concern the overall euro currency group including uncertainty as to how far interest rates will rise and the strength of the US economy.
Jamie Sanderson, head of the European team at Edinburgh Find Managers, says France offers a breadth of stock options not found anywhere else in Europe although its prevailing macro-economic condition reflects that of many of its continental neighbours.
French boardrooms, he says, have become much more investor friendly, taking onboard US and UK shareholders' values.
Sanderson adds: "France has been improving its position on shareholder value to a greater extent than most other European economies. Investors have become used to getting more talk than action from some markets but French boards have on the whole just got quietly on with it."
That is seen in greater focus by French firms on core activities, the selling of non-core businesses and a much more focused approach to acquisitions.
As evidence of this Sanderson cites Total Fina as one of the most attractive oil companies in Europe. He also highlights pharmaceutical stock Aventis for its earnings growth and BNP, a bank with good cost cutting potential after its purchase of Paribas.
Leo Houterkamer, manager on the European team at Flemings, says the major investment trend evident in French equities is that money is chasing short-term earnings potential, whereas before March it had been seeking out long-term earnings growth.
He says: "At the moment investors don't like long duration stocks where the earnings are going to hit far in the future. They want companies where there is earnings growth in the short term."
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