“Yes, we’ve got political question marks over France and Germany,” he admits, “but I think probably the French elections will go the way of Holland. I’ve got a hunch Marine Le Pen won’t get in.”
“Also, European Central Bank President Mario Draghi recently talked up the market by saying the economy is shaping up and hinting that it won’t be long before he is reducing the quantitative easing programme.
“He even suggested that there could be a rate hike, which is quite positive news.”
Although, Lowman and company are wearier of the UK economy, given the “Brexit conundrum,” they think that UK small caps have recovered nicely from their “torrid year measured against the large caps” and could benefit from a rally in the price of sterling.
An uptick in M&A activity and increased interest from overseas predators will similarly provide a boon to smaller British companies.
“I’m quite positive on that space and the valuations still look cheap or cheaper than they have been.
“For the patient investor, looking along a slightly longer time horizon of three to five years, I think there are some strong points that can be made for dipping one’s feet into that space.”
