Industry Voice: The Three Dynamics Shaping a Promising Outlook for Europe

Innovation, sustainability, and the market cycle create distinct opportunities

clock • 4 min read
Industry Voice: The Three Dynamics Shaping a Promising Outlook for Europe

The T. Rowe Price European Select Equity Strategy has performed strongly in a volatile market since its debut two years ago. We believe a large part of the explanation for this success comes down to three key elements: our investment philosophy and process, which focuses on innovation and exploiting the investment edge provided by our high‑quality in‑house research; the lessons we have learned from executing and testing our approach; and the opportunities offered by a large, complex market.

As the strategy enters its third year, we view three dynamics as shaping the prospects for the European equity space and the opportunities within the universe:

  • A region rich in innovation and disruption
  • A leading edge in sustainability
  • A shift in the market cycle

Europe Is Rich in Innovation and Disruption

Our aim is to identify, thoroughly understand, and back high‑quality growth companies that are innovators, disruptors, and, as we see it, on the right side of change—qualities that know no national or regional boundaries.

Innovation is not the preserve of the U.S. or Asia, a view that has perhaps been supported by the rise of the FAANGs (Facebook, Apple, Amazon, Netflix, and Alphabet) and their dominant performance over the past decade. Europe, perceived as being encumbered with mostly traditional businesses and dysfunctional banks, is in fact home to a multitude of cutting‑edge manufacturers and a growing number of disruptive health care and information technology companies.

The innovation theme has been central to the construction of the concentrated portfolio within Europe Select. Examples among our top investments include:

  • ASML Holding has a monopoly on next‑generation high‑end lithography tools (EUV machines) for semiconductor manufacturers. They will adopt this new machine to increase the number of transistors onto a chip to power cutting‑edge applications.
  • Siemens, a global industrial company operating in the power and gas, digital factory, and process industries and in renewables markets benefiting from the so‑called fourth industrial revolution.
  • Lonza Group, a Swiss company that is a leading contract manufacturer for drug companies and has a competitive advantage in the rapidly expanding sphere of biologics manufacturing.
  • Teleperformance, a global customer experience provider that has become an indispensable part of the fast‑growing digital economy.

 

 

 

Important Information

For professional clients only. Not for further distribution.

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.

It is not intended for distribution to retail investors in any jurisdiction.

This material is issued and approved by T. Rowe Price International Ltd, 60 Queen Victoria Street, London, EC4N 4TZ which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.

© 2021 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

Advertisement

More on Investment

Recession will be the main focus in Q3

How to invest in a recession

Mild recession already priced in

clock 11 August 2022 • 4 min read
All the latest from the world of ESG investing

ESG Blog: UN secretary urged governments to impose windfall tax on 'immoral' energy companies

Round-up of ESG coverage

Investment Week
clock 04 August 2022 • 1 min read
The extraordinary general meeting (EGM) will take place on Friday 5 August.

Trian 1 story continues as shareholders call for support ahead of extraordinary general meeting

'Not fit for purpose'

clock 26 July 2022 • 4 min read
Trustpilot