Speaking to InvestorDaily, Instreet managing director George Lucas said the recent drop in European shares on the back of the Crimean crisis could be the result of an excuse by investors to sell, and that the conflict will have little to no effect on the earnings of European companies.
“It could be that people want an excuse to sell and so the situation in Ukraine could be used more as an excuse,” Mr Lucas said.
“Obviously one of the most favoured markets this year has been the European market, and they have been sold down quite aggressively overnight on the back of the situation,” he said.
While it has been a popular strategy among advisers and wealth managers to look heavily at European equities recently, which may impact those holding European stock, the overnight sell-down also presents an opportunity to get into the market, Mr Lucas said.
“At the moment we are having a bit of a market knee-jerk reaction and investors are using this as an excuse to sell off, rather than it having a massive impact on earnings,” he said.
“From an economic point of view, with people trading with Ukraine and doing business, it’s probably not going to have a huge economic effect.
“There will not be a lot of European companies earning money out of Ukraine.
“But because a lot of gas pipes run through the country, any conflict creates the prospect of further contagion that the market may take that as an excuse to sell off a bit, which could generate an opportunity to get back into Europe.
“In reality it won’t really have any effect on the ability of European companies to earn an income; it won’t impact their earnings.”
