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Bet on European Equities With Global Reach: Analyst
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Assistant Producer, CNBC
Despite fading prospects for growth in the euro zone, which struggles to solve a spreading debt crisis, European equities have defied the odds to rise 8.4 percent this year, prompting one analyst to say it's a good time to bet on European firms with a global reach.
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"What you want to look at effectively is sectors and companies which have a global reach," Willem Nabarro, Head of European Equities at Exane-BNP Paribas Asia told CNBC on Wednesday. "You don't want to be in the companies which only are invested in Europe.
The FTSE EuroFirst 300 Index [.FTEU3
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], which lists the region's 300 largest companies by market capitalization, is up 8.4 percent year to date, compared to a 6.8 percent drop in the last six months of 2011.
Companies that are headquartered in Europe but are collecting revenues from other parts of the world like Asia will pay off well, says Nabarro, who is bullish on the pharmaceutical, mining and oil and gas sectors.
In the pharma space French drugmaker Sanofi [SASY.PA
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], Roche [RHHBY.PK
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] and GlaxoSmithKline [GSK.L
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] are some of his picks.
"You will be looking at the moment at the big pharmaceutical companies, which have got a very big reach like Sanofi, they've got a very good reach into China," he said.
He is also bullish on Anglo-Australian miner Rio Tinto [RIO.L
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], British oil and gas company BG [BG.L
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] and German insurance firm Allianz [ALIZF.PK
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].
While Nabarro says to look out for companies that are "paying and growing their dividends" he cautions against investing in firms which have been paying huge dividends, but can now slash their payouts to investors.
Disclosure: Willem Nabarro and Exane-BNP Paribas have no holdings in the stocks mentioned above.
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