Equities will provide a number of "interesting opportunities" for UK investors as markets move into 2019, Schroders’ James Sym has said.
Speaking to FTAdviser Talking Point, Mr Sym, who manages European funds for Schroders, explained the key driver behind weak markets had been "an increasingly negative operating environment", as the number of companies struggling to grow profits was "worse than what people had hoped for".
But he said equities were a "double-edged sword" as stock market volatility had also opened up "interesting opportunities for investors".
Mr Sym said: "We're seeing a drawdown in valuations and profits expectations for companies, and that's the driver of these very weak markets.
"You've obviously got the trade wars and geopolitics, which will remain and which make it very difficult to forecast very strong demand, and set against that we've got some companies in our universe – European equities – that have been down 50 per cent or more."
Indeed, for many advisers’ clients the rise of geopolitical uncertainties such as China and the US which are locked in an ongoing trade war, together with the possibility of a no-deal Brexit, has added to fears of a recession.
However, Mr Sym added: "It gives our companies and management teams the imperative to improve their businesses and take those tough decisions, cut costs where they need to cut costs and really invest in the best bits of the business.
"It also gives us a chance to buy really interesting franchises – really interesting entry points – because obviously, we're able to buy these stocks at a much cheaper valuation."
Consumer stocks such as Asos, which have taken a tumble recently, nevertheless remained decent businesses, Mr Sym said, and so should be watched as an area of interest.
He added: "[Markets] will remain volatile, and driven by some of the macro situations, but given where valuations are now I think we've got a much more positive forward-looking expectation for the market."
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victoria.ticha@ft.com
