Nearly fifty per cent (46%) of private investors expect to see two or more member states leave the euro area over the coming 12 months, according to Lloyds TSB International Wealth.
Lloyds TSB International Wealth commissioned YouGov to poll just over 1,000 investors each with more than £250,000 of savings and investments, excluding property.
As many as 42% of those polled have high expectations of a “complete break up” of the Eurozone within the next five years. With such low confidence in the EU market, it’ll come as no surprise to learn that just four per cent of investors say they’ve increased their investments in Europe over the last six months.
Philippe Schindler, Chief Investment Officer – EMEA at Lloyds International Wealth, said, “Eurozone markets have dramatically underperformed in recent months, except for safer German government bonds and quality corporate bonds. Both institutional and private investors have been reducing their exposure to the euro, acknowledging political uncertainty and positioning their investments for further difficulties.”
As for recent political events dominating European headlines, Derry Pickford, macro-analyst at Jersey-based Ashburton, says the Greek, French and German election results over last weekend were all broadly inline with market expectations.
“Markets seemed to react reasonably maturely to the results and it hasn’t been used as an excuse to break. The bigger impact on the DAX which has gone from around 6750 level before the first round of the French Presidential elections to above 6570 at Monday’s close. France’s CAC40 has gone from 3190 to 3214 over the same period. Given that the Franco-German election is essential to both French and German foreign policy, neither side will wish to jeopardise it. That is not to say that there will be a seamless transition from ‘Sarkel’ to ‘Merllonde’, Hollande will be keen to be seen to gain some concessions from Germany on fiscal austerity but will not wish to position France as being a leader of the Mediterranean countries.”
It was the Greek elections that caused Ashburton most concern and, admits Pickford, continue to do so. “With the New Democrats and PASOK unable to form a majority government, another election looks possible. The chance of a second Greek default and the collapse of the Troika programme are rising. One possible result of this could be a Greek exit from EMU. We see no immediate end to disruptive news flow from the Eurozone,” he warns.
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