Global Funds Focus on Strong European Stocks
International stock managers say Europe's markets should continue to shine in the '90s
INTERNATIONAL stock funds are poised for major market gains once the world economy revs up, according to several mutual fund managers.
In fact, some managers say that global stock funds - given their focus on promising markets such as Spain, Switzerland, the Netherlands, and Hong Kong - could outperform the United States stock market during the next year.
Europe is already being watched closely by Wall Street. The start-up of the Walt Disney Company's entertainment complex near Paris, the World's Fair in Seville, and this summer's Olympic games in Barcelona are drawing attention. Such enterprises boost consumer spending, thus providing a financial lift for local economies. Beyond such immediate gains, broad economic growth is expected to accelerate in Europe - spurred by growth in the US. The British economy is already slowly expanding and other nations a re expected to join the upswing.
European stock markets that have performed especially well this year, according to Morgan Stanley & Co., include France, Switzerland, Germany, and the United Kingdom.
Norman Kurland, the international portfolio manager of the Pioneer Europe Fund, says European markets might do better over the next few years than the US stock market. The Pioneer Europe Fund is ranked third in terms of performance out of 26 European funds watched by Lipper Analytical Services Inc., for the 12 months to April 16, 1992.
In addition to the Pioneer Europe Fund, Mr. Kurland also oversees the $700 million international portfolio of the Pioneer II Fund. Kurland says that because the main expansion lies ahead, investment managers will have to be particularly alert for buying opportunities. In the case of continental Europe, that may come in the third or fourth quarters of the year.
Kurland is not worried about Japan: Tokyo's tumbling market should give a boost to continental funds. He says the Nikkei should not drop below the 12,000 point level. The stock index is currently in the 17,000 point range.
Fund managers give several reasons for investing in Europe, including: the relative inexpensiveness of European stocks, the large pool of European public companies, economic integration under way, and the steady cash-flow positions of European companies that either have North American subsidiaries or undertake substantial business dealings with the US.
The Pioneer Europe Fund relies on European-based regional advisors who monitor the fund's portfolio in their respective nations. Looking beyond Europe, Kurland sees potential in the Hong Kong market and Mexico. And even some Japanese stocks, he says, show long-range promise.