Euro woes loiter three years on from bailout

There's still money to be made from euro stocks, but investors remain wary of prospects.

Three years on from the "temporary" eurozone bailout, investors remain worried about the prospects for the region, particularly with continuing fears about Cyprus, Spain and Italy among others.

Against that background Germany has been a bit of a powerhouse but with chancellor Angela Merkel running again in the country later this year there remain questions about future growth. Indeed recent economic figures from the eurozone, and Germany in particular, have been disappointing. Yet there have been decent returns to be had for careful investors.

In fact since the bailout was announced on 9 May 2010, the leading Europe equity funds have climbed by around 60 per cent, compared to an average 30 per cent rise for the sector. David Dudding, manager of the Threadneedle European Select fund, says his his success - a 59 per cent rise over three years - is down to careful stock-picking.

"Economic growth in Europe will continue to be sluggish for some time," he says. "However good-value European-based companies, which do business successfully, can still be found."

His secret, he says, is to invest in companies with strong market positions which have proved that they can maintain competitive advantage, pricing power and good returns even in difficult economic scenarios. He cites examples such as Nestle and Anheuser-Busch, the world's largest brewer.

"The riskier cyclicals and financial stocks, although apparently cheap, could still be value traps as they will often be affected by excessive leverage, weak domestic demand and an inability to sustain pricing and returns in a downturn," he warns.

Darius McDermott of Chelsea Financial Services thinks investors should look beyond the current uncertainty. "I think the market is still very good value for longer-term investors. European companies are actually in a much better state than their governments and the continent is home to some world-leading busineses."

However Andrew Milligan, head of global strategy at Standard Life Investments, remains very cautious: "The bailout process, despite many failings, has kept the EMU together as an entity and prevented a major depression across the eurozone.

"However, the price to be paid is that it has seriously undermined investor confidence. There is considerable uncertainty about what future support packages might look like as no uniform approach has so far been agreed. Some of the recent bailouts, such as Cyprus, have left questions floating in the air, such as the threat to depositor accounts."

For cautious investors the message seems pretty clear – wait until some degree of certainty returns to the region. When that will be is impossible to predict.

Stefan Isaccs, manager of M&G European Corporate Bond, says: "We have begun to witness tentative signs of stability, but much work remains to be done."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

peopleMathematician John Nash inspired the film Beautiful Mind
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
Arts and Entertainment
The pair in their heyday in 1967
Life and Style
fashionFrom bathing dresses in the twenties to modern bikinis
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf
    From Shakespeare to Rising Damp... to Vicious

    Frances de la Tour's 50-year triumph

    'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
    'That Whitsun, I was late getting away...'

    Ian McMillan on the Whitsun Weddings

    This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
    Kathryn Williams explores the works and influences of Sylvia Plath in a new light

    Songs from the bell jar

    Kathryn Williams explores the works and influences of Sylvia Plath
    How one man's day in high heels showed him that Cannes must change its 'no flats' policy

    One man's day in high heels

    ...showed him that Cannes must change its 'flats' policy
    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine