German and Swiss investor sentiment rises

Investor confidence in Germany and Switzerland has continued to rise over the past month, following a significant drop in the wake of the ‘Brexit’ referendum, research suggests.

The latest figures from the Centre for European Economic Research (ZEW) indicate investor sentiment in Germany rose by 5.7 points on September’s level, to stand at 6.2. Assessment of the present market environment in Germany has also increased, gaining 4.4 points to reach 59.5.

Investors are bullish on the Eurozone’s prospects, with sentiment rising by 6.9 points to 12.3. Conversely, they are bearish on its current state, with sentiment declining by a further 2.3 points in October to a level of -12.8.

“Improved sentiment is a sign of relatively robust economic activity in Germany – however, positive impulses from industry and exports should not distract from existing political and economic risks, particularly those concerning the German banking sector,” comments ZEW President Professor Achim Wambach.

The figures are in stark contrast to the reading produced in July, which indicated German investors’ confidence in their domestic economy had plummeted since the UK voted to leave the EU. Then, confidence stood at its lowest level in four years, -6.2.

Economic sentiment in Switzerland has grown by 2.5 points, and now stands at 5.2. Sentiment towards the current economic situation also increased, rising by 9.9 points to 17.9.

The majority of surveyed experts (69.2%) expect the Swiss economy to remain unchanged over the next six months, but are more optimistic toward the eurozone and USA. Sentiment in both cases increased by 8.1 and 35.1 points respectively.

Inflation in Switzerland is expected to increase, however. For the first time since May 2011, a majority (53.8%) forecast an increase in the inflation rate in the next six months. Long-term interest rates in Switzerland are also expected to rise.

Investors are also pessimistic in respect of the Swiss stock market, with 37.1% expecting the Swiss Market Index to grow in the coming six months, the lowest reading recorded since the survey began in 2006.

ZEW gauged the sentiments of 220 analysts and investors in both countries.

©2016 funds europe



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