"In recent weeks we have seen an escalation in the scale and scope of the European debt crisis with Italy and Spain's government bond yield spreads to Bunds rising sharply. In addition, key lead indicators of global growth (such as the PMIs) are pointing to a sharp slowdown. On the European front, the approach by policymakers so far has not gone far enough. Even with the EU Summit from last month, there remain key missing details such as the actual implementation and its timing as well as the size of the EFSF. It is understandable that one may be concerned about economic growth in Europe. However, there are also many good companies in Europe providing interesting investment opportunities."
Alberto Chiandetti, Fidelity Funds Italy Fund
"Ultimately, as a stock picker I find the current market environment to be frustrating. Many Italian companies are reporting decent results, but these companies are down over considerably as they suffer due to the volatile macro/political situation. Overall, I view this as a European crisis, not just an Italian crisis, and until politicians across Europe come together and solve this markets will remain unpredictable and risk aversion will rule. If they do come together we can get back to refocusing on fundamental stock picking. In a 'normal' environment I believe there are a number of great stock picking opportunities as Italy has many well run, highly profitable global leaders I can invest in."
Alexandra Hartmann, Fidelity Funds Euro Blue Chip
"So far this year, markets have had to contend with a number of issues chief among these are the lingering sovereign debt crisis, the next phase of global growth and inflationary pressures (most notably in the emerging economies). In recent weeks, we have seen heightened investor concerns on all three fronts. The government bond yield spreads for Italy and Spain over Bunds are near their Euro-era highs and key leading indicators of global growth (such as the PMIs) are pointing to a sharp slowdown. The severe macro headwinds have lead to increased market volatilities in the short term. It continues to be my task, as always, to do thorough company analysis, understand how a company is positioned for growth, seek those companies which are driving their growth from internal sources like very strong product positioning and hence pricing power, equally those which are prepared, through relatively flexible cost structures, to whether adverse market conditions in the best possible way and of course, always a key investment criteria for me, those which have good balance sheets. The latter is particularly important in these times of tight liquidity. There is a price for everything and I am thinking as much of opportunities now as I do of risks."
Matt Siddle, Fidelity Funds European Larger Companies Fund
"We are in an environment where companies are finding it tough to beat earnings expectations, European politicians are not doing enough to calm the markets, and uncertainty remains. All of this has a detrimental impact on sentiment and market movements have reflected this. That said, recent market falls and low valuation largely reflects this uncertainty. In a market situation like this, I think it is best to remain focused on high quality companies with sound business models that can steer through this storm relatively unscathed."
Fabio Riccelli, Fidelity Funds European Dynamic Growth
"Even though stock markets have been volatile recently, I am comfortable with the current positioning of the fund and believe my investment style will help the fund to outperform in these uncertain times. Even though the recent macro data and earnings have been slightly weaker than consensus the results of the companies I hold have on the whole been in-line with my expectations. Despite the woes in some of the peripheral countries, it needs to be remembered than Europe is a heterogeneous region and there are areas that are growing strongly, such as Germany and the Nordics. Europe has many "global leaders" in diversified sectors such as luxury goods, healthcare and industrials which the fund is overweight in. The fund's investment style is to buy growth companies which are "higher quality" than the market as they benefit from steady, highly visible top line growth, high barriers to entry, generate a lot of cash and these characteristics are generally rewarded in uncertain times. The holdings also benefits from structural changes such as demographics which will happen regardless of the macro economic environment"
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