Barings foresees Europe corporates outperforming US counterparts

European corporates will continue to outperform their US counterparts in the current credit crunch market due to greater levels of global diversification, James Buckley, manager of the £206m Baring European Growth Trust, has said.

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Mr Buckley maintained US companies were suffering more during the liquidity crisis because they generate a high proportion of their revenue domestically. He said a greater proportion of European firms derived revenue from emerging markets, which had been less affected by the liquidity crisis.

He added: "The immediate effects of the credit crunch can now be seen working their way through the system. Tighter lending criteria and lower return on equity are having an effect at the European corporate level.

"However, Europe’s increased levels of global diversification have helped companies to show greater resilience to the deteriorating economic conditions. With unemployment reaching new lows, we believe this trend will continue."

Mr Buckley said he expected European equity markets to trade nervously over the next couple of months, but he expected a firm footing for the market later in the year.

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