DIY Investor Magazine
/
March 2017
37
A VIDEO INTRODUCTION TO HENDERSON EURO TRUST PLC
background economy, such as Atlas Copco in Sweden
and Siemens in Germany, are seeing an improvement in
many areas related to higher consumer spending.
Banks are seeing a widening net interest margin (the
difference between the income generated from loans
and the interest paid out to depositors), albeit a gradual
one, and increasing demand for loans, as chart 2 shows
Source: Thomson Reuters Datastream, Fathom
Consulting, covering Euro area, as at 30 December
2016.
Markets have seen a rapid move out of ‘growth’, and into
‘value’. This is an over-simplification, but one that gives
a reasonable gist of what is happening. This switch has
pushed up the price of ‘value’ stocks to beyond their
ten-year average, while valuations on growth stocks
have fallen below theirs.
This trend may have further to run, but the key to 2017
will be signs that the shift towards value has gone far
enough, given the reality that growth in our ‘mature, low
growth world’ cannot be conjured into existence like a
magic trick.
Chart 2: Demand for loans is increasing
There are significant hurdles ahead, but they are not yet
visible. We are keeping a wary eye open, while looking
for outstanding companies that have been penalised far
too harshly by the market. We accept that it looks too
early to make a significant move back into ‘growth’ yet,
but that may well be the direction of travel on a six-to
nine-month view.
Past performance is not a guide to future performance.
The value of an investment and the income from it can
fall as well as rise and you may not get back the amount
originally invested.
The information in this article does not qualify as an
investment recommendation.
