FINANCIAL issues have hardly been out of the headlines in the last five years. The European Union has been struggling with the mounting debts of some of its weakest economies, which has led to mounting fears among investors.
The crisis has even raised questions about whether the Euro can survive as a currency?
While Greece only represents 1% of the eurozone economy, it is the risk of the domino effect of contagion that concerns investors should it default. As well as the Greek problem, Europe’s challenge is to stop Italy and Spain ending up like both Greece and Portugal.
So what opportunities are there for investors in what remains a tough and uncertain economic environment? There are exciting and attractive investment opportunities.
Take, for example, large blue-chip companies with a strong and healthy market position. Such companies have seen their prices held back as a result of high-level macro-economic circumstances outside of their control, yet they remain attractive propositions through their proven resilience.
Investors should be looking at these cash-generative companies, with their strong balance sheets and more predictable profit streams.
Some of the best opportunities today can be found in the telecom and pharmaceutical sectors.
And one of the safest places to invest in equity markets are in defensive sectors such as consumer staples – industries that manufacture and sell food and beverages, tobacco and household products.
These are typically the last products to be removed from the household budget.
In addition, many analysts see corporate bonds as a promising asset class. Exaggerated fears of mass defaults are, in the eyes of many, presenting investors with unprecedented value in high quality corporate bonds, which offer very attractive yields.
Equity investing can be volatile. But history is clear - stock markets tend to rise over the longer term, despite short-term fluctuations. Good investment opportunities still exist for the prudent investor, across a diversified portfolio. However, to find these requires the expertise of a skilled and experienced wealth management specialist.
For a complimentary guide covering wealth management, retirement planning or inheritance tax planning, call Simon Hoadley Wealth Management on 431938.