Hot Features
Premium
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
The Euro Zone crisis have dragged on for far too long, and funnily most of the analysis has been restricted to finding a scape goat for the prolonged problem. Despite the fact that every investor knows that excessive spending led to the unsustainable level of debt and deficits, many investors are still looking to make it big with Euro bonds and European Bank debts.
But most of the problems of Euro have been the unwillingness of the Union to throw some weight behind its members. The recent pledge from Mario Draghi, the ECB Italian Chief that the European Central Bank will do whatever it takes to save the Euro is giving an unprecedented optimism to the entire region’s bank bonds.
As the ECB agreed to create money to purchase struggling countries’ debt without limit, the Euro body has ushered in the decisive phase of Europe’s battle to save the euro. If the ECB’s resort to the printing press fails to stabilize markets and buy time for crisis-hit countries to recover, then the Euro as a currency, and the EU as an International body will be forgone conclusion.
Pacific Investment Management Co. and BlackRock (MAHQX) Inc. are among the recent investors from the United States to first react to the news by buying up bank bonds in Europe’s most indebted nations. Pimco’s almost $3 billion exchange traded funds enhanced the proportion of its corporate-debt holdings by almost 8 percentage points in three weeks, adding notes of lenders from Spain’s BancoSatanderSA to Italy’s IntesaSanpaoloSpA.
BlackRock also added to its Satander Holdings in the period while Alliance Bernstein LP increased its allocation to bonds of Spainish lender Banco Bilbao VizcayaArgentaria SA.
Much of this Euro optimism was also an offshoot of the recent Spain’s budget where Spain was able to set a detailed timetable for its compulsory economic reforms, after the country unveiled a tough 2013 budget, in readiness for the looming strict bailout terms, the euro was able to gain a dose of confidence after rising against the dollar and the yen after tumbling to two weeks lows earlier.
Despite the renewed optimism, not a few investors will still be skeptical about the investment potentials in Europe. Although, European companies that make their money from overseas are still attracting a fair share of investment from within and outside of Europe. There is however a lot than mere promises before the Euro and EZ nations like Italy, Spain and Greece especially bounces back.
Germany Europe’s biggest and most striving nation will have to show more support as a sovereign nation, and as a powerful member of the Union, if not what is left of Europe may finally collapse.
