Election results have grabbed the European headlines, but we still believe in a bottom-up approach to investing there.
We recently received the following question from one of our shareholders. If you have questions you'd like to ask our team, please email us at [email protected].
What's your outlook on stocks in European companies, if considering long-term investment, after the results of the French and U.K elections?
Well, I’m a bit slow on this response, but I think my answer would be the same: It depends on the company.
The market seems to be relieved with the results of the French election, and we’ve seen a broad inflow of money into European stocks since late April. Following the parliamentary voting in May, it would appear Emmanuel Macron will have control of his government, which should be pro-Europe and pro-business, but as with all governments, we’ll have to see what they actually get done.
As for the U.K., a soft Brexit will be better than a hard Brexit, but again we’ll have to wait and see exactly how things shape up.
Europe appears to be regaining its economic footing, which is good news for European companies in general. But what we’re seeing is far from robust growth, so I wouldn’t exactly characterize it as a tide to lift all boats – at least not very far.
However, just as in the U.S., there are European companies doing interesting things regardless of the economic environment. In the Independence Fund, we think zooplus’s online pet-supplies business is a nice growth story, and System1 (formerly Brainjuicer) continues to prove that its unique approach to market research has legs.
Getting through these political landmines relatively unscathed is a good thing for the broader market, but we’ll always be more interested in investing in great companies that can create value over the long term regardless of what’s going on in the White House, 10 Downing, or Elysee Palace.
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