The importance of the emerging markets driving European growth is more relevant today than at any point in the recent past. It is estimated that in 2009 circa 25% of European companies sales are exposed….
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Whereas a quarter of European companies sales are in the developing markets, there are clear ‘sector winners’ with higher proportions. Sectors such as Food & Beverage and Oil & Gas will have some 40% of their sales in the emerging markets. Other sectors such as Chemicals, Healthcare, Telecoms and Industrials will also have meaningful exposure with circa 25-30% of their sales directly exposed to the growth regions.
As a contrast, sectors with the lowest overall exposure to developing markets will include Utilities and Travel & Leisure with a mere 5% -10% of sales respectively. Financial Services, Retail and Media are also relatively weak on this measure with circa 15-20 % sales exposure.
Having high exposure to emerging markets sales is however not always a pure gain. The Tech sector for instance is the most exposed of all European sectors with nearly 50% of sales – and yet also faces some of the most intense structural challenges from emerging competition. Consequently, we would selectively look to favour sectors and stocks that capture some of the stronger emerging corporate franchises; including companies operating in the oil services, mechanical engineering, brewing, food manufacturers and materials. Conversely we take a more cautious view on Utilities and Travel & Leisure in particular given the negative growth differentials.
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The views and opinions contained herein are those of Shogo Maeda, Head of Japanese Equities, and Nathan Gibbs, Fund Manger for Japanese Equities, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. For professional investors and advisers only. This document is not suitable for retail clients.
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Fonte: ETFWorld – Schroders
