European growth stocks attractive as inflation pressures ease (LON:JEDT)

JPMorgan European Discovery Trust plc (LON:JEDT) has now published its April 2023 factsheet which can be found below.

The European investment trust JEDT provides an attractive entry point for investors on a 15.48% discount to NAV as at 8 June 2023.

Monthly as of 2023/04/30

  • The trust underperformed its benchmark over April.
  • Positive contributors to relative returns included stock selection as well as an overweight position in construction & materials, and stock selection in personal goods sectors.
  • Detractors included stock selection in technology hardware & equipment and industrial engineering sectors.
  • At a stock level, an overweight position in Intercos, an Italian provider of ingredients for cosmetics, outperformed as the post-Covid-19 recovery in demand for beauty products continues.
  • An overweight position in SPIE, a French multi-technical services company, outperformed as demand for electrical installation continues to be strong, with businesses and governments investing in more energy-efficient products.
  • On the other hand, an overweight position in Melexis, a Belgian designer of automotive chips, underperformed over investors’ concerns that carmakers have now sufficiently increased their inventories of semiconductors.
  • An overweight position in Ipsos, the French market research company, underperformed as Covid-19-related contracts with governments come to an end.

Looking Ahead as of 2023/04/30

  • While regional bank turmoil has been worrying, bank capitalisation overall still looks very healthy and has improved significantly since the 2008 Global Financial Crisis.
  • However, the tightening of lending standards and elevated interest rates could be a drag on overall economic growth by reducing capital available for business spending and investment. Additionally, margins are now starting to decline for many companies, and we expect weak profits in 2023.
  • Nevertheless, recent data points suggest that inflation has likely peaked and is gradually falling to more manageable levels. As inflation pressures subside and tighter credit conditions pose risks to the global outlook, central banks will have to reverse course and set the stage for a new multi-year period of low, long-term interest rates.
  • The current lower level of equity valuations means that markets might be less vulnerable to risks including a recession, credit tightening, earning downgrades or higher interest rates.

JPMorgan European Discovery Trust plc (LON:JEDT) aims to provide capital growth from a diversified portfolio of smaller European companies (excluding the United Kingdom).

For more information, please visit the JPMorgan European Discovery Trust plc website here

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