Eurozone Investors Remain Buoyant...

(April 25, 2013) – Three quarters of European investors expect global economic expansion in 2013 , a survey on sentiment towards growth this month has found.

The report conducted by the Economist Intelligence Unit (EIU) and BNY Mellon found an increase of 15% in feeling positive on growth compared to last year. This is surprising as European investors said they believed the Eurozone would remain the largest drag on global growth this year despite finding value opportunities in the troubled developed economies of Greece, Italy and Spain.

The research examines the prospects for economic and market growth from the perspective of institutional investors and corporate executives. Based on a global survey of 730 respondents the report explores the potential for risk scenarios and for growth across a wide range of sectors, regions, and asset classes.

Last week, aiCIO, reported on the state of the current economic climate and why despite Cyprus’ bail-in and a lack of an Italian government, investors remain comfortable investing in the Eurozone again. It outlined two major drivers behind investors’ lack of panic within such an uncertain economic climate.

These were: The European Central Bank’s, Mario Draghi saying”We’ll do whatever it takes to preserve the euro” and the introduction of the Open Markets Transaction mechanism (OMT). Despite the lack of spending within the sector OMT has successfully halted a destructive spiral by promising to help countries if they were to suffer liquidity problems.

The EIU report found European investors as a whole ranked the European Union after China, the United States, Southeast Asia, and Brazil as offering the best prospects for asset price growth this year. Investors were found to also be searching for growth in faster growing emerging markets according to research.

However within the UK it was found that investors are among the most ‘pessimistic’ about economic and investment prospects for the EU.

“A meagre 4% of UK investors picked the EU for strong economic growth prospects compared with 10% of global investors and 15% of Western European investors.” The report said. “UK respondents are also pessimistic about asset price growth in Europe: only 12% picked the EU for best growth prospects compared with 19% of the global investors and 28% of Western European respondents.”

Earlier this month, billionaire speculator George Soros urged German chancellor Angela Merkel to quit the euro in an effort to help the single currency survive. Soros said: “austerity doesn’t work”, and also acknowledged that if Germany would be forced into a recession “the monetary policy pursued by the Eurozone is out of sync with other major currencies” due to the others engaging in quantitative easing.

The EUI report showed that German investors chose the EU as the number one region in the world this year for asset price growth. Some 52% of German investors surveyed picked the EU before the US, China, and Southeast Asia for best asset price growth.

The research will be presented today, April 25th at the Bellwether Europe event in London.