Mounting investor confidence in Europe
15 January 2013
In January, the European investor confidence increased for the fifth consecutive month, shows the Sentix index, which measures the sentiment about the euro area’s economy. According to Bloomberg News, the index went from minus 16.8 to minus 7.
The index thereby reaches the highest level since July 2011. Economists had, according to a Bloomberg News survey, expected that the index would rise to minus 14.2, but they were pleasantly surprised.
The mounting investor confidence is a positive consequence of the European Central Bank's promise last year to buy unlimited government bonds in countries which sign up reform plans.
In addition, a new debt agreement with Greece was concluded, and these events have dampened the concerns that the euro-zone would ultimately be split.
"That the index improvement has been so sharp is in part a result of many small improvements in the euro area, for example Greece's successful buyback of government bonds," says economist at Sentix Sebastian Wanke to Bloomberg News.
Out of the recession
And the mounting confidence amongst investors may be a sign that the worst year of crisis may be behind us.
"Especially the expectations for the future have risen, but the assessment of the current situation is still low," writes senior economist in Danish Bank Frank Oland, in a comment on the figures.
“This reflects that investors increasingly believe that the debt crisis is being put behind us. This is also reflected in the significant drop in both Spanish, Italian and Greek government bond interests. At the same time there are signs of increasing global growth, which will also help lift the euro-zone out of the recession at the beginning of this year. "
He also notes that the Sentix index to a large extent is a measure of market sentiment, so if the market is wrong, the Sentix index is probably also.