Despite ongoing problems which are affecting the eurozone, European investors remain confident in the survival of the european currency. It emerges from the poll, conducted by Allianz Global Investors, with institutional investors in Europe, that 80% of those questioned believe in the ability of the euro to cope with current challenges. British investors are less optimistic.
However 42% of people interviewed think that stability mechanisms will probably be enforced once again within the eurozone, whilst 25% of them think that the introduction of euro bonds is important. Only 11% of those interviewed think that the establishment of a common fiscal system within the region, which for many is an essential condition for the sustainability of the European currency, is a likely outcome in the short term.
Following the publication of the results, Anrdeas Utermann, the Chief Investment officer of RCM, a society within the Allianz Global Investors group, indicated that "a dismantling of the Eurozone hardly seems probable, if one takes into consideration the prohibitive costs that such action would imply. Besides, we feel that the efforts made by the authorities in the region are stating to gain momentum. Although its still not clear whether the haircut on Greek debt will go beyond July’s proposal of private sector participation of about 20%, it seems unlikely that Greece will leave the Eurozone. Nonetheless, we must recognize the impact of political risk on the current capital markets environment"
A number of Eurosceptics anticipate a split of the Eurozone, but such a scenario seems equally likely to a number of defenders of the euro. British investors are the most skeptical with 41% of those interviewed, not entirely convinced by the ability of the Euro to survive in its present form, whilst a few openly indicated that they anticipated a Greek default followed by an exit from the zone. On the other hand, the large majority of those interviewed in Germany and in France, as well as the group of people interviewed in Germany, think that the euro will be able to resist the current troubles.
Andreas Utermann added that "The skepticism from the United Kingdom with regards to the Euro is nothing new. However, it must be noted that, despite being outside the eurozone, Britain benefits from the stability of the European currency, considering the strong economic and financial bond that links Britain to the zone. Recent statements made by the British Prime Minister urging his EU peers to take action bears witness to this fact.’
The Allianz Global Investors survey targeted 140 institutional investors in 11 countries during September 2011. These investors represent in total, an estimated amount of more than 900 billion Euros worth of assets under management or advice.
