Industry Voice: There is more to Europe than meets the eye

In the biggest, shiniest, or most talked about companies, innovation is obvious. Yet like opportunities, innovation is sometimes hidden, waiting to be discovered. Similarly, Europe is regularly overlooked, but there are bright opportunities in not so obvious places.

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Industry Voice: There is more to Europe than meets the eye

At first glance

When we think of innovation, we may picture California's Silicon Valley, the dazzling towers of Shanghai, or hotspots like Incheon in South Korea, as hubs that are truly breaking new ground. Meanwhile, the powerhouse FAANGs (1) have set the bar high with trillion-dollar market capitalisations, while Europe seems stuck in limbo. It is fair to say that compared to Europe's well-known hubs such as the European Organisation for Nuclear Research (CERN), the laboratory of Gran Sasso and the European Space Agency, with regards to innovation, European companies are not making such obvious waves.

Also, if we examine the composition of the Euro Stoxx 50 over the past 10 years, a consistent picture emerges. On average, only two index components have been replaced per year since 1997 (2). The same companies continue to come out on top, and investors largely crowd around the same European names. Consistency is typically a good thing, but not if you are an investor who seeks something different.

Europe is often neglected, and it is not always obvious that new and exciting opportunities exist - yet, perhaps surprisingly, they do.

Beneath the surface

A new reality is driving change globally: people want to work smarter, live and invest more responsibly and have easier access to information on what matters to them, forcing countries and companies to adapt and innovate. Also, when we talk about innovation, it is not always exclusively in relation to technology. Often, technology is the enabler that allows companies to meet the evolving demands of a population and to compete better.

Perhaps, more than most regions, Europe is multi-faceted. Its constituent countries have their individual attributes: they grow at varying rates, they focus on different industries, and their people have diverse strengths and cultures. This broad backdrop increases the diversity in sectors where innovation is taking hold, offering a great selection of opportunities: ground-breaking biotech companies, leading renewable energy players, and well-known companies within the healthcare sector; the list is as immense as it is diversified.

The overall impetus behind Europe's drive is not as tech focused as in the US and Asia, but in no way does it diminish its cutting-edge momentum. Europe is ripe for innovation with a multitude of opportunities to offer, in a variety of sectors; yet it requires the right perspective to uncover them.

Europe may be overlooked, but that doesn't mean we should stop looking.

 

(1) FAANGs: Facebook, Apple, Amazon, Netflix, Alphabet's Google (2) Siblis Research "Euro Stoxx 50 change".

PROMOTIONAL MATERIAL. For professional investors only. This material may not be reproduced, in whole or in part, without prior authorization from the Investment Manager. This material does not constitute a subscription offer, nor does it constitute investment advice. This material was prepared by Carmignac Gestion Luxembourg SA and is being distributed in the UK by the Investment Manager. Carmignac Gestion - 24, place Vendôme - F-75001 Paris - Tel: (+33) 01 42 86 53 35 - Investment management company approved by the AMF - Public limited company with share capital of €15,000,000 - RCS Paris B 349 501 676.  Carmignac Gestion Luxembourg - City Link - 7, rue de la Chapelle - L-1325 Luxembourg - Tel: (+352) 46 70 60 1 - Subsidiary of Carmignac Gestion - Investment fund management company approved by the CSSF - Public limited company with share capital of €23,000,000 - RC Luxembourg B 67 549.

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