Global economy plays key role in maintaining Europe’s growth

“In the recent market turmoil, European bourses have arguably suffered disproportionately, especially given the region’s largely strong underlying fundamentals”, say Roger Guy and Guillaume Rambourg, co-managers of Gartmore’s £2 billion European Selected Opportunities Fund. The predominance of financials has weighed heavily on European stock markets. Some 30% of the FTSEurofirst 300 comprises banks, insurers and financial-services companies.

However, providing global growth remains strong, there is every reason to remain bullish about Europe according to Guy and Rambourg. “Growth in exports has been a key factor in the improvement of sentiment towards the region and dependence on direct exports to the US has also diminished. The eurozone exports more to Asia than the US and almost twice as much to Eastern Europe”.

Although consumer and business confidence indicators have recently dipped in Germany, this erosion of confidence is mainly due to financial market turmoil according to Guy and Rambourg. Thanks to falling unemployment, German consumer confidence had held up despite the increase in VAT at the start of the year. Germany is shaking off its reputation as the ‘sick man’ of Europe to resume its role as the engine of Europe’s economy.

The Gartmore European Selected Opportunities Fund is rated AAA by Standard & Poor’s, as at 31 July 2007.