* U.S. Fed stimulus withdrawal talk pumps up dollar
* Fund managers, strategists position to tap trend
* Pharma, consumer goods, miners all seen as targets
By Francesco Canepa
LONDON, July 11 European share investors looking
to protect themselves from a curbing of U.S. monetary stimulus
are targeting companies with a chunk of their earnings in
The dollar recently hit a three-year high against a basket
of currencies, boosted by the prospect of a winding down
of U.S. money printing at a time when central banks in Europe
are still trying to stimulate their sluggish economies.
Prospects for U.S. growth are also better than in Europe and
potentially many emerging markets, meaning that companies
looking for dollar exposure are not only doing so for currency
Searching for dollared companies is relatively new, but a
sample of 20 European consumer stocks offering at least 20
percent sales exposure to North America has risen by an average
15 percent year to date, or three times as much as the
pan-European STOXX Europe 600.
"We look for European companies that actively trade with the
U.S. and benefit from the recovery there and from the dollar's
strength," said Matthias Thiel, market strategist at
Hamburg-based M.M. Warburg, which has 44.4 billion euros ($56.77
billion) under management.
"We expect the growth differential between the U.S and
Europe U.S. to stay for longer."
Among possible winners are Belgian food retailer Delhaize
, British publisher Pearson and Dutch grocer
Ahold, all of which get at least 60 percent of
revenues in North America.
Pharmaceutical firms such as UK-listed AstraZeneca, where
U.S. sales account for around 40 percent of the total, are also
seen as dollar-play winners, although both European pharma
and consumer sectors have relatively full
They trade at multiples to their futures earnings that are
in line with their 10-year averages, compared with a 6 percent
discount for the broader STOXX 600 index.
That meant some were looking for a cheaper bet on a lasting
rebound in the greenback through an option on blue chips in
Britain's FTSE 100 index, which get nearly a quarter of
revenues from the United States.
Kokou Agbo-Bloua, European head of equity and derivative
strategy at BNP Paribas, said investors were using options to
bet on a rise in the FTSE this year thanks to a weaker pound.
DOLLAR BEAR TO BULL
U.S. Federal Reserve policy tightening at a time of slowing
Chinese growth has led some asset managers to expect the start
of a multi-year dollar bull market.
That has already seen money leave emerging markets and into
U.S.-focused funds in the second quarter of the year, Lipper
"We're still at a very early stage of people moving around
to a more positive structural dollar view," Paras Anand, head of
European equities at Fidelity, said. "We're probably nearer the
beginning than the end of this process."
Mark Tinker, manager of AXA Framlington's global
opportunities fund, expected further flows out of emerging
market equities, commodities and bonds into assets that benefit
from a stronger greenback, such as European stocks with dollar
"There were a lot of people that were short the dollar and
long emerging market equities, commodities and bonds and as the
dollar rises they become forced sellers," Tinker said. "The
unwinding of those short dollar trade has got a bit further to
JP Morgan's strategist Emmanuel Cau said this trend could be
played in European stocks by buying companies that export to the
United States and selling those that export to emerging markets.