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December 22, 2013 1:26 pm
Jane Austen once observed that things that are “going untowardly one month, are sure to mend the next”. If she were around today, the novelist might instead be a fund manager. Extending her timeline a bit, her observation was textbook advice on how to make money in Europe’s stock markets in 2013.
It helped to own shares of companies on the rebound, because restructuring was the name of the game. Shares of telecoms equipment maker Alcatel-Lucent have risen 250 per cent since January; travel group Thomas Cook is up 300 per cent. Investors who bought either of those stocks a year or two ago, when both companies were sickly and required rescue finance, would have been brave – and handsomely rewarded.
The turnround at wind turbine maker Vestas – up 400 per cent – partly reflects swings in energy policy. But its shrinking cost base and asset portfolio changes played a big part. Danish jewellery group Pandora (up 125 per cent) and International Airlines Group (up 115 per cent) also reaped benefits from reorganisations. Many market stars are still trading partly on promise. Look no further than Nokia (up 95 per cent). It has yet to detail how it will be run and what cash will be returned now that its handset business has been sold to Microsoft.
There were some organic growth stories among the top-performing stocks – Asos and Ocado in online retailing and easyJet among airlines. But the muted M&A climate meant that dealmaking had relatively little impact as a driver of the stock market. Even the bank sector’s star performer – Bank of Ireland – hails from the eurozone’s periphery.
Things are unlikely to be the same in 2014. This year’s winners reflect the uncertain pace of Europe’s recovery. Some cyclical stocks have yet to begin motoring – truckmakers, for example – and dealmaking could play a larger role. But never mind that. What would Jane say?
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