We all know that UK’s Brexit vote and the election of Donald Trump as the 45th President of the United States took the financial markets by surprise, with the former sending the Great British pound (GBP) tumbling to a 31-year low in June and October of 2016.
It’s incredible to think that these markets have continued fluctuate over the course of the last two years, with assets like the GBP and the Euro (EUR) still losing value and trading in a narrow range. This has been borne out by the recent performance of pan-European stocks, which saw tentative gains lost against the backdrop of a leadership challenge to the British Prime Minister and Italy’s budget slowdown.
While the market may still be gripped by incredible volatility and uncertainty, however, there are glimmers of hope for investors and especially those with a decidedly long-term outlook. In this article, we’ll look at three EURONEXT 100 IDX niches that are set to perform well in the future and consider some of the firms that embody this.
- The Telecoms Sector
- Electrical Components and Energy Management
We start with the European telecommunications industry, which has endured a challenging 2018 thanks to a sustained economic slowdown and the implementation of more stringent regulations.
The latter are only likely to have a temporary impact on this diverse and fast-evolving industry, however, while the market leading firms are currently eyeing innovation and M & A driven strategies and key methods of driving growth in 2019 and beyond.
There are couple of firms blazing a trail in this respect, including the Telenet Group based in Belgium. This company has performed consistently well even against the backdrop of a challenging economic climate, while it also achieved a peak share price of 49.88 back in September.
The 52 week trading range is currently 37.48 to 62.55, which is a testament to the relative health of the company and the portents for the industry as a whole. At the end of last week, the share price also rose by 4.51%, with this trend expected to continue in the near-term.
The market for electrical components is also likely to grow regardless of the wider market conditions, with firms that are focused on energy management and the reduction of waste expected to fare particularly well.
It’s already been confirmed that the global Energy Management Software Market will display noticeably higher growth over the course of the next five years, while the demand for installation components will also peak during this period.
One firm at the head of this curve is Schneider Electric, which is based in France and has maintained a steady share value during the course of the last six months.
While the brand saw its value decline marginally by 2.93% recently, a 52 week trading range of between 57.66 and 78.56 is relatively narrow and consistent given the economic climate. A closing price of 61.00 last Friday also provides a foundation for further growth in the next quarter, with demand likely to increase slightly during the festive period.
- The Automotive Trade
In many ways, the respective automotive trades in Europe and the UK are expected to bear the brunt of the economic fall-out post-Brexit.
This appears to have had an impact on share prices in the sector of late, with Peugeot and Renault having seen their values decline by 0.33% and 2.49% respectively.
However, shares in car manufacturers have generally increased in value of late, with European firms benefitting from increased demand in regions such as China.
This has occurred as a result of robust EU trade agreements with China and Japan, while the news that Chinese authorities are considering cutting vehicle sales tax will also increase the number of overseas sales in some of the world’s largest markets.
As a result, there’s scope for the European automotive trade to consolidate in the coming quarter, especially if the demand from Asia and the U.S. continues to increase.