14/10/2011
EdRAM focuses on high dividends, M&A, and emerging market growth
In a context of limited growth and minimal visibility, Edmond de Rothschild Asset Management (EdRAM) is preferring three major themes: high-dividend shares, mergers and acquisitions, and emerging market growth. In addition to profits and valuation multiples, “the dividend component will be stronger,” Philippe Lecoq, deputy director of EdRAM and co-head of European equity management, said on 13 October at a press conference. The priority sectors include health, telecom, and oil producers. According to EdRAM, high yields and share valuations may bring an average of 7% returns in dividends, and possibly as much as 9% for some shares in the telecom sector. The current merger and acquisition cycle, which began in June 2010, is currently in a slowdown phase due to a lack of long-term visibility. The sector, which leapt by 100% in six months, now shows only a 39% increase in value in the first nine months of 2010. “We are nonetheless highly confident about the theme of mergers and acquisitions,” says Olivier Huet, Euorpean equity manager at EdRAM, since all the factors favouring a rebound in the cycle are fully present. The third theme, emerging market growth, represents a major leverage point for European businesses. Emerging markets represent an increasing proportion of the activities of European businesses, with 28% of sales, 275 of operating profits, 50% of growth in revenues and 32% of the value of assets, according to estimates by Société Générale. And, says Huet, exposure to emerging markets via European businesses makes it possible to combine “quality governance with dynamic growth.”
