John Bennett: 'jungle' Europe won't stay cheap for long

The European Cental Bank (ECB) has been forced into a position where it has had to bend its policy to suit 'jungle' rules, Henderson's John Bennett believes.

Speaking at an investor conference, the European Focus fund manager said that financial markets had coaxed the ECB into bending its fiscal discipline and to monetise eurozone debt via its three-year long-term refinancing operation, launched in December.

‘The ECB [has] done what it said it wouldn't’t do. They’ve breached all the stability rules, breached the debt ceiling and ballooned their balance sheet. Why? This isn’t the rule of law; it’s the rule of the jungle,’ Bennett (pictured) said.

Despite the difficulties that Europe continues to face, Bennett, who also runs Henderson's European Selected Opportunities Trust which he took over from Roger Guy, said he still has hope for the Continent.

Companies are trading at around eight times their trend earnings, the manager argued, and pointed out Europe will not stay discounted for long if sentiment shifts.

‘You are looking at one seriously cheap asset class, particularly when you compare it to the US where [P/E ratios] are in their teens,’ said Bennett.

‘You can find a lot of cheap, cash rich companies with high-dividend yields,' Bennett continued, however he added that another sell-off would not be impossible because conditions can get tough toward the end of bear markets.