Elections are the focus of attention

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The start of the new year is accompanied by ongoing euro skepticism. This is also helped by the important elections in the coming months. The EBI figures for the Netherlands and France, which are noticeably rising, show just how much investors are looking for "correct" choice of options. Overall, the likelihood that a country will leave the euro remains high at 21.3%.

The stability of the single European currency remains a concern for investors in 2017 as well. The sentix Euro break-up index, which reflects the likelihood of a Eurozone break-up, drops only slightly from 21.8% to 21.3%. While the acute concerns about Italy have declined somewhat (nevertheless, Italy remains the country with the highest exit probabil-ity), the countries with upcoming parliamentary and presidential elections are in the focus of investors.

sentix Euro Break-up index: Headline Index and subindex for Italy

For the Netherlands, we recorded a rise in the EBI from 3.3% to 4.2%. This is lower than the peak recorded immediately after the British Brexit vote. However, the trend is now clearly pointing upwards again.

sentix Euro Break-up Index – Teilindizes für Frankreich und die Niederlande

Four countries are now in an unfavorable trend: Greece, Italy, France and the Netherlands. This is a wave of uncertainty in Europe that is pointing to a clear risk of contagion for the euro crisis.

In the sentix contagion risk index, this can be read off easily:

sentix Euro Break-up Index: Risiko der Ausbreitung

For Europe's top politicians there are enough reasons to be concerned.

Background

The sentix Euro Breakup Index is published on a monthly basis and was launched in June 2012. Its poll is running for two days around the fourth Friday of each month. Results are regularly published on the following Tuesday morning. Survey participants may choose up to three euro-zone member states of which they think they will quit the currency union within the next twelve months. Further details on the sentix Euro Breakup Index can be found on http://ebr.sentix.de.

This month’s reading of 21.3% means that currently, this percentage of all surveyed investors expect the euro to break up within the next twelve months. The EBI has reached its high at 73% in July 2012 and touched its low at 7.6% in July 2014.

The current poll in which 1,220 institutional and retail investors participated was conducted from January, 26th to January, 28th 2017.

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