Europe's private sector exposure to Greece has been reduced significantly since the last Greek drama in 2012, with European banks, in particular, reducing their holdings of Greek government debt to immaterial levels," says Tim Crockford, co-manager of the Hermes Sourcecap Europe ex-UK Fund (IE00B7702B61). "The contagion threat is that fear spreads to the periphery of Europe, pushing up yields and potentially derailing the recovery that is under way in the region. We expect that the ECB will continue to stand behind markets and, while European yields have climbed since their trough, they continue to remain well below historic levels."
Mr Crockford likes corporates that have diversified their revenue bases domestically and internationally while reducing their costs, enabling them to withstand a downturn and make hay if a recovery takes off.
Renault (FR: RNO)