Lazard flags European markets as growth area
The Euro has been the catalyst of change for Europe and that is why Lazard Asset Management is backing the region as the next investment growth area, Lazard managing director Charles Carroll says
"Deregulation has bought on good change in Europe and has introduced global competition for European companies," he says.
These types of change have been the underlying force behind the US economic growth, he says, and while Japan has deregulated a number of its industries they are being slow to change.
"In the US, they deregulated in the late seventies and that hurt a lot of companies," says Carroll. "But that resulted in better use of capital so we see deregulation as good."
The merger and acquisition activity in Europe still has a long way to go and the cuts in corporation tax in various countries will also stimulate growth, he says.
"The old map of Europe was built by wars, but the new map is being built by competition," Carroll says.
The manager bases its value investment strategy on looking for low price in old ecomony stocks which is countered by the high price for new economy stocks.
The dangers of this strategy, Carroll warns, is investing in an old economy stock that has embraced technology can create a value trap if the company has misspent on IT.
"Growth stocks investment must be based on fundamentals," he says.
"As value managers we see more companies that fit the profile are in Europe."
Lazard is predicting a GDP rise in Europe next year, however, it warns unless oil prices fall, that might slow down the rate of growth.
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