More Brexit-style referendums loom in Europe, RBC manager says

Amid volatility, Dominic Wallington is focusing on companies with low valuation or high dividends.

Michael Ryval 14 July, 2016 | 5:00PM
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The political fallout from the United Kingdom's decision to leave the European Union as a result of the so-called "Brexit" referendum is casting a pall primarily on continental members of the EU, as the potential for another member country holding a referendum hangs in the air, says Dominic Wallington, manager of the $5.7-billion RBC European Equity and chief investment officer of London-based RBC Global Asset Management (UK) Ltd.

Nevertheless, even as continuing uncertainty means that markets promise to be volatile, Wallington is staying the course and focusing on companies that either are cheap on a valuation basis or pay high dividends.

Curiously, while the FTSE 100 Index -- the benchmark for UK stocks -- is up about 4% year-to-date, the Frankfurt DAX Index is down almost 10%. And much of that is due to the fall of the pound sterling against a basket of currencies, which has improved the competitiveness of international firms based in the UK, says Wallington. "The reason why the FTSE 100 has performed as it has is because of the predominance of international companies."

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Novo Nordisk A/S ADR101.41 USD-0.95Rating
Procter & Gamble Co144.34 USD0.16Rating

About Author

Michael Ryval

Michael Ryval  Michael Ryval, a regular contributor to Morningstar, is a Toronto-based freelance writer who specializes in business and investing.

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