Why Southern Europe offers better value than ‘squeezed' UK

Andrew Neville, manager of the Allianz Global Small Cap Equity fund, has said the best value stocks across global markets can now be found in Southern Europe, following rallies across most of the globe.

His favourite countries in the region are Italy and Spain, which he said offer much greater upside potential than other European countries, in particular the UK where valuations are becoming “squeezed”. “It is much harder to get UK domestic ideas into the portfolio, because Europe has much more growth,” the manager (pictured) said. “Mid caps in the UK are trading on 16.5x book value, compared to 13x long-term average, for example.” However, he said the UK is the only area where earnings are growing, and investors must remain open to possibilities to invest there. “Valuations are...