NewSmith's Maigrot: Short luxury, go long EU banks

Investors have punished stocks with even small exposure to Russia, while disregarding political risk closer to home, argues NewSmith's Jean Maigrot. He explains which sectors investors ought to be long and short.

Ebola, ISIS, civil unrest in Hong Kong - geopolitical risks are multiplying around the world. But it is events closer to home that pose the biggest threat to European equity portfolios, especially if fund managers fail to correctly interpret the consequences. The Renault example Take the Russia-Ukraine crisis for instance. Renault’s share price has been punished because it makes a tenth of its revenues in Russia, and investors fear the impact of sanctions. The stock has fallen as much as 20%, a double-discounting in price. Renault’s example shows how fear can exacerbate the discoun...