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European Investment Outlook PDF Print E-mail
Thursday, 04 December 2008 16:27

European Investment Outlook

As we saw at the beginning of our survey, there are so many fundamental reasons why Europe doesn’t deserve to be sucked into the (rather milder) US/Japanese recessionary vortex of 2001 that it’s really rather hard to accept that it’s already happening in practice.

Nobody with a clear head for figures should ever doubt that the European economy has all the fundamental strengths on its side - its growth rate, its savings rate, its low level of dependence on technology, and all the rest.

Yet nobody with any common sense should doubt that the sheer electronic interconnectivity of the world financial markets since the mid-1990s has made it all but impossible for any one market to stay aloof from damaging outside influences.

European Investment Outlook & America's genuine Charms

Besides, America has genuine charms of its own - not least, its political sense of certainty. Its new president is going to be there for the next three and a half years, come hell or high water. Compare that absolute certainty with the muddled situation in Europe, where France is becoming fed up with Germany, Germany is disillusioned with the euro, and four of the five major nations (Britain, Germany, France, Italy) face new elections or new governments very soon. Compare the seasoned wisdom of Alan Greenspan at the Fed (19 years so far) with the relative inexperience of whoever gets appointed to succeed Wim Duisenberg at the European Central Bank (two years) - and they’re still squabbling over that appointment, incidentally.


Europe has other problems that America doesn’t have. It hasn’t sorted out the question of tax harmonisation. Its 15 members speak 11 languages. Its telecommunications infrastructure is primitive in the south, and its farming crisis in the north is getting steadily worse.

But the bottom line is, and still remains, that Europe is a fundamentally ideal place for foreigners to invest.

European Investment Outlook - Stock Markets

Its stock markets are young compared with their US counterparts. Its fast-growing private pensions system creates huge opportunities for mutual funds all over the world. Its debt ratios are puny compared with those of the States. Its extremely high level of self-sufficiency (the EU supplies 75 per cent of its own imports) helps to insulate it from malign trade influences.

Its currency is already the favourite denomination for international corporate bond issues, having outstripped the dollar in January. It hasn’t pinned its faith on new technology. Sooner or later, all this will be recognised for its own merits. We hope.

 

   

 

Last Updated on Tuesday, 06 January 2009 14:34
 

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