2024 will be a year characterized by volatility and turbulence. But there will be no shortage of opportunities on European stock markets. We talk about it with Tom O’Hara, European equity manager, Janus Henderson.
How to look at stock investments in 2024?
“Looking ahead to 2024 we can expect more schizophrenia, more volatility and more erratic behavior in the markets as everyone is obsessed with recession, inflation and the fact that interest rates have peaked. Whether it’s a soft landing or a hard landing, we can expect more turbulence. In the United States right now, spending on building new factories accounts for nearly 0.6% of GDP – we haven’t seen this level of spending on building manufacturing facilities since 1990. The significance of this figure is that we are facing a generational turning point after having witnessed increasing globalization for over 30 years, with the movement of production activities to Asia. Even if this is only a partial reversal, it can be a very powerful indicator to understand where investments are being concentrated and which companies will benefit from it.”
Do you see interesting opportunities in Europe?
“Investors should not be constrained by investing in Europe in and of itself. Rather, it is about targeting companies that are listed or born in Europe, but are actually globally relevant, dominant on a global scale in what they do, leaders in their individual sectors. This, combined with some major changes we are seeing in the world right now, offers a great opportunity to invest in European-listed global leaders, exposed to global themes and globalization, massive amounts of investment in artificial intelligence, cloud computing. In short, in those companies destined to thrive despite macroeconomic turbulence.”
Which sectors in particular?
“Rising rates have brought discipline back to industries and some sectors will benefit, or more precisely, the incumbents of those sectors will benefit from such economic rationality. The alcoholic beverages sector, for example, where consolidation is underway in favor of the big players. AB InBev is the largest brewer in the world and is benefiting from the difficulties that small craft breweries, many of which emerged in the last 10-15 years during the low interest rate paradigm, are experiencing. Of potential interest are the sectors functional to buildings, whether they are heavy materials companies dealing with earth moving works, of roads and highwaysFor example CRH o Holcim. or companies that provide the hardware and software to automate manufacturing plants or manage data centers.”
Returning to the technology sector, does Europe offer particular investment opportunities?
“There are interesting companies that provide the hardware and software to automate manufacturing plants or manage data centers. As well as, the semiconductor companies, in which Europe excels. There is a very interesting Dutch ecosystem at the moment, which provides the machinery necessary to produce all the chips that we will need in abundance in the coming years.”
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