A string of earnings downgrades from European autos and the sector's recent underperformance could open up a cheap entry point for investors, reckons Fabio Di Giansante, senior portfolio manager at Pioneer Funds.
The gloomy economic backdrop has crimped demand for cars in Europe, pushing manufacturers to cut plant capacity and labour costs.
As a result, the sector has lagged the summer rally, adding just 11 percent since the start of June against a surge of some 21 percent on the EuroSTOXX 50 .
That "could create another buying opportunity in the future for some of the better performing names because they are good names, especially BMW , which is a very good company," says Di Giansante, who manages around 800 million euros in a euro zone equities fund.
"We are waiting for right entry points on other names to play this story."
He still sees potential for emerging market growth to drive earnings for euro zone corporates, but reckons investors need to be more cautious from here as not everyone will benefit.
"At the beginning of any growth phase, there is room for everybody while in the second phase, when growth is lower, you need to be very selective and find the right stock and the right company," he says. "The emerging markets consumer story does not necessarily refer only to luxury names. It could be that they will upgrade their pharma expenditure or they could upgrade their financials exposure, for example buying life insurance products."
Top picks for this theme include Adidas , Inditex , Publicis and Continental , he says.
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Keywords: MARKETS EUROPE STOCKSNEWS