Asked if there are any sectors he avoids, Fidelity European (FEV ) fund manager Marcel Stötzel explains why Tesla has made him bearish about other car manufacturers.

This is the fourth excerpt from our recent virtual event with Fidelity European. You can watch earlier excperts on:

• Where Europe’s next bids could come from;
• Europe’s turning point versus the US;
• Why the best stocks are dividend growers.

If those whet your appetite, you can also watch the one-hour ‘Big Broadcast’ of the whole event. 

Can’t watch now? Read the transcript

Gavin Lumsden:

Are there any sectors or subsectors the trust wouldn’t invest in, in any circumstances?”

Marcel Stötzel:

Wouldn’t invest in, in any circumstances? I wouldn’t say never in any circumstances. Everything has a price and as long as it’s not something on a sanctions list or something like that, that we obviously wouldn’t invest in. Other than that, everything has a price at some point.

What I would say right now, something that we’re quite bearish on is autos, I touched on earlier. Tesla has really been tanking this market with price cuts. Tesla is not in our index, so we don’t follow it directly, but I went to the Berlin Gigafactory a couple of months ago and spoke with investor relations and that kind of thing. It’s very clear that they’re prioritising volume over margin and over price. Thankfully, I don’t have to call whether that’s the right thing for Tesla to do, but what I do know for sure I that that’s not good for the other players in Europe.

So that, combined with the fact that obviously, pricing in autos was very elevated as you had the chip shortages and then autos remain the second biggest purchase most people will make in their lives. It’s just that in this environment it’s tough to see the having the pricing power and therefore, dividend growth that we spoke about.