Is the Time Right for Investing in Europe?

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May 20 (Bloomberg) -- Neil Dwane, Chief Investment Officer Equity Europe at Allianz Global Investors, examines the new focus on investor activism in Europe, remaining troubles in the Greek economy and investing opportunities in European markets. He speaks on Bloomberg Television’s “Market Makers.”

You are seeing managers becoming more activist.

In a lot of industries ui seeing companies spinoff divisions that were nice to have but didn't really do anything to the core competence of the business.

Are there companies that need outside activism?

There are families there who have been that led companies for generations will stop -- for generations.

Are they the perfect end of company to go after?

Some of them really are, as you say, and the stone age.

But the volkswagens of this world are leaders in what they do because they have family ownership that takes a 20-year view, not a 20-minute yoview.

What is the distinction between shareholder laws in the u.s. versus europe?

Are they nicer there?

Actually, they are not nicer.

When it comes to the ways it shareholders to become more active, there are more defense mechanisms naturally in the european system.

And governments are getting involved.

You have the french government getting involved, u.k. government getting involved with astrazeneca.

It is a good and bad thing going on in europe.

The types of deals we are seeing in the telco space suggests the european regulators and government know that instead of having 43 suppliers of juncos we should 5 like you do in the u.s. . they recognized some elements of scale crude ring benefits to customers and also in terms of investment.

The flipside is that they don't want things to be too capitalistic.

I couldn't stress enough last time, the financials.

The government is not pro-capitalism and finance per se.

France right in the middle?

Germans are not synthetic to banks particularly full -- sympathetic to banks particularly.

The psyche is different.

When you look at places like greece, spain, portugal, many people from the outside think we have gone too far, too fast.

Unemployment in a country like spain is 50%. youth unemployment is higher than that.

It is long-term growth concern.

Now that you have spent yielding less than the u.s., i would argue it probably is crazy.

The news i would leave you and your audience with is that this is an international phenomenon.

Asia and america is buying the peripherals.

Europe to some extent has stood to the side.

Why, because europe knows better?

"i was in spain last week, it still sucks"? there is an element of that but europeans are generally more cautious, more conservative.

We lost a lot of our clients in italy who bought italian bonds when they yielded 8% and now that they yielded 3, they are beginning to feel that the valuation trade has moved too far.

When i was going to greece on vacation i had a lot of people saying "buy me debt." our u.s. investors underestimating risks that are still over there?

I would say in general because the time horizon for fixing greece is measured and probably a decade.

There was a collapse of gdp of over 40%. it makes the great depression here feel like it was a practice run.

The recovery will not be a sharp v-shaped recovery.

People who are sending their thinking this is an easy trade for the next couple of years, they are likely to be disappointed, simply because the economy is going to take a lot longer to change.

You look at the greek banks, there were rules -- there are 3 of them and before the financial crisis there were 24. the 3 that are left should, and gary, have a stronger recovery profile that sectors where recovery has to take place.

What do you want to get across?

The punchline is basically that europe is 30% cheaper than the u.s. and the growth prospects in the u.s. are overrated compared to the growth prospects in europe.

When we look at the types of returns we're looking for in the equity markets, income stories work very well.

You have a lot of attractive assets in both categories.

The opportunities in europe are sectors rather than regions?

No, where not looking at it particularly in this sector basis.

You can find lots of companies that yield over 5% growing their dividend at 10% here.

Does the story change if the ecb pumps more money into the system?

That might attract even more money in.

My concern is that he is now in great danger of overpromising and under delivering.

Whatever the ecb does in june will only have an incremental benefit and the next 6-12 months.

Do the parliamentary elections mean anything?

Only have a national level.

Everything will move on naturally.

International investors will be looking at how much of a protest vote there is in italy or spain or greece or france.

When you're looking at european stocks and areas you are interested in, do you want more global diversified play?

You get the world leaders in europe but you also have a lufthansa restructuring itself because of the tougher times we have seen in the last 2-3 years.

What you get generally in europe is less exposed to the u.s. 30% turnover in european companies.

It is significantly less exposed to the burgeoning -- the air emerging-market.

If you think emerging markets will be a growth story sometime in the next 2 or 3 years, europe gives you both.

What is the downside?

You have won alix and i over.

She wants to vacation in france, i plan on yachting in the mediterranean.

What is the downside?

Expectations are much too high for what mario draghi will do.

The idea that a weaker euro is what is required to stop deflation in europe is not going

This text has been automatically generated. It may not be 100% accurate.


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