Relatively high valuations in a particular stock market are followed by a steady appreciation of the home market’s base currency in the next five years. Therefore it’s very likely that the dollar will resume its upward trajectory versus the euro.
The leading European equities indices have jumped this morning as reports emerge indicating a deal has been reached to offer Greece a new bailout and keep it in the eurozone.
Germany’s finance minister Wolfgang Schäuble put the question to the Greek government during negotiations, according to a senior member of Greece’s negotiating team.
The launch of the ECB’s bond-buying programme has led to a convergence in net inflows into investment grade bonds and European equities, an analysis of recent Morningstar fund flows data shows.
Despite the possibly devastating consequences of a Grexit on European equities, asset management companies’ confidence in the asset class remains at record levels, according to the latest EIE Fund Manager Sentiment survey.
Markets around the world have once again been spooked by Greece as the European Central Bank limited funding over the weekend and capital controls were imposed.
Emerging market debt and high yield bonds, which have had some pretty high inflow volatility recently, are now firmly back in favour with European investors. By contrast, net inflows into investment grade bonds are slowing down.
As Greece is heading for a default, which would significantly increase the possibility for the country to be forced out of the eurozone, markets have plummeted. This is not at all surprising, considering Europe’s fund buyers have consistently been telling us they will decrease their allocations to both bonds and equities if a Grexit appears likely.
Asset management companies are starting to struggle explaining their investment philosophy to fund selectors according to a survey by research outfit Cerulli. It asked a selection of European asset managers what they find the biggest challenges in promoting their products to fund selectors.
The announcement by the Icelandic government last week that it is planning to lift the capital controls on the island can already now be seen as a watershed moment for local fund selector polls, at the Expert Investor Iceland held last week in Reykjavik revealed.