JPMorgan European Discovery Trust plc (LON:JEDT) has announced its November commentary.
Month in review
As of 30/11/2024
- The trust underperformed its benchmark in November. However, JEDT’s 1 year cumulative performance is 12.71% versus 5.55% for JEDT’s benchmark index, MSCI Europe ex UK Small Cap Index (Net).
- Positive contributors to relative returns included stock selection in travel & leisure and industrial transportation.
- Detractors included stock selection in construction & materials and stock selection and an overweight position in electronic & electrical equipment.
- At the stock level, an overweight position in Do & Co, an Austrian airline and live-event caterer, contributed after it reported very strong results as the company continued to gain market share.
- An overweight position in Saipem, an Italian oil services company, also contributed to relative returns. Its shares continued to move higher in November following a strong quarterly update at the end of October, at which point management increased earnings guidance, prompting upgrades to consensus estimates. Saipem also announced a sizeable contract win in Indonesia towards the end of the month, providing increased visibility on outer-year earnings forecasts.
- Conversely, an overweight position in CTS Eventim, a German-headquartered live-event online ticket seller, detracted from relative returns. The company announced an unexpected new capital expenditure (capex) outlay. However, the management team later confirmed that the actual capex is lower than investors initially thought, and the return on investment is high, so the share price has started to recover.
- An overweight position in Nexans, a French high-voltage cable manufacturer, also underperformed after a very strong run due to a combination of French political instability and uncertainty around the impact that the US election will have on the outlook for renewable energy and electrification.
Looking ahead
As of 30/11/2024
- With European economic growth forecast to increase in both 2025 and 2026, we believe there are signs for optimism. The disinflationary trend is likely to continue, alleviating some pressure on central banks, which have adopted a measured approach to interest rate adjustments.
- European equities trade on an extreme discount to US equities. This argument may not be new to prospective investors; however, the European equity market can offer comparable levels of quality and growth potential. This valuation support is recognised by European CEOs, who are buying back more stock than ever before.
- Looking ahead, improving economic conditions, attractive fundamentals and structurally improving interest rates are likely to present investors with many appealing opportunities across markets.
JPMorgan European Discovery Trust is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
