The majority of European investors believe buoyant financial markets do not reflect underlying weaknesses in the eurozone, according to Fitch Ratings’ quarterly investor survey.
According to the report, the doubters are in two camps: 29% who feel that this is a short-lived period of market calm; and 30% who said markets are irrationally exuberant, ignoring the weak economic outlook for Europe.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The remaining 41% of survey respondents were of the opinion that the worst of the crisis is over due to strong support from the ECB and policy makers.
Highlighting "a stark dichotomy between the continuing recession with rising unemployment across Europe and the rally in financial markets," the international credit rating agency said if the latter is not validated by economic stabilization and progress towards banking union, the danger is that market volatility will return with a vengeance over the summer, as it did in 2012 and 2011.
In the survey, concern for the economy was also evident in investors’ views on recession and inflation risk. Eighty-six percent said a prolonged recession poses a high risk to the European credit markets, up from 69% in the last survey and an all-time high.
In a further indication of the low confidence in economic recovery, the survey respondents regarded inflation as unlikely, with only 9% of respondents ranking it as a high risk while more than three times as many (29%) regard deflation as a high risk.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataFitch conducted the quarterly survey between 3 April and 7 May. It represents the views of managers of an estimated EUR8.6 trillion of fixed-income assets.
