In the company’s third-quarter Global Strategic Outlook, Neil Dwane, its chief investment officer for European equities, notes that investors have this year been preoccupied with Japan’s “Abenomics” experiment, a potential tapering of US quantitative easing, and events in the Middle East.
Europe, so often the focus in 2012, has largely fallen out of the headlines. Dwane argues this is because the region has made “slow progress, on many fronts” – in part because its refusal to debase the euro is forcing governments to implement the reforms needed for economic recovery.
On the EU, Dwane forecasts further progress on the “more Europe” approach this year. Allianz expects coherent plans for bank supervision and resolution by the end of 2013, which alongside tougher and more realistic stress tests should enhance confidence in the eurozone banking system.
FTT ‘a good thing’
Dwane even takes heart from the proposed European Financial Transaction Tax – a levy that has met with fierce opposition from many in the financial services industry.
While he notes that the tax will raise the cost of capital for European companies and may deter much-needed investment, the fact such a measure could be implemented is encouraging.
“It is further evidence that European politicians are not beholden to the financial industry in quite the same way as other countries,” Dwane writes. “This might be a good thing longer term as [quantitative easing] has mostly benefitted banks to date.”
In line with its largely upbeat view, Allianz Global Investors predicts above-consensus economic performance for the eurozone, this year and next. The firm expects a seasonally-adjusted expansion of 1.80% for the currency bloc in 2014 – almost double the consensus forecast of 1.00%.
A copy of the Allianz Global Investors Global Strategic Outlook can be downloaded from the company’s website, here.