Greece: The new Spain?
LONDON (Reuters) - Investors who see European companies as uncompetitive ventures, struggling under the weight of the tough job markets and low economic growth, should think again, says AXA Framlington European fund manager Mark Hargraves.
“For companies such as Deutsche Telekom, it is difficult to cut costs, but Deutsche Telekom is very much the exception to the rule.”
An increase in shareholder activism and a change toward more proactive management is helping many companies to save money and increase their margins, Hargraves said, citing German tire maker Continental as one example.
“This type of company was expected to fold under low-cost pressure from China,” he said. “But management has restricted the cost base and cut labor costs.”
“There has been a quiet revolution in European profitability over the last decade,” Hargraves said at an investor conference yesterday.
Europe’s economy has sectors of growth that should be tapped into by investors, despite broadly underperforming other economies, Hargraves said.
“Germany has been able to increase its market share in the global export market,” he added.
There are also countries, such as Greece, that are poised for the kind of economic growth recently enjoyed by Ireland and Spain, triggering more profits for the firms that operate in them, he argued. “Greece is very much the new Spain; it offers a good long-term structural growth story.”
http://www.ekathimerini.com/4dcgi/_w_artic...1/01/2006_65829