tuart Mitchell, manager of the SWMC European Fund, expects UK and European authorities to 'do whatever it takes' to calm financial markets in the wake of the Brexit vote. While Mitchell believes UK growth will be impacted, he is still positive on the ability of companies on the Continent to succeed.
"The UK accounts for just 6% of Eurozone exports – the direct economic impact on companies in the eurozone is, on average, likely to be limited. Of course, averages are only averages, and we are alert to potentially more adverse impacts for individual companies," Mitchell says. "However, it is true Brexit could threaten, by contagion, the whole European project. But do not underestimate the willingness of the ECB and the Bank of England to 'do whatever it takes' to calm financial markets." While the market is clearly unsettled, Mitchell remains bullish on many European corporates.
"There is no reason to think great growth companies – such as SAP AG , Essilor and Amadeus – will not continue to thrive. For example, we cannot see why VW or Rosenbauer should be directly affected by the vote. The pace of restructuring and the outlook for the Chinese market are more important issues," Mitchell adds.