Fears of a euro breakup fade

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The sentix Euro Breakup Index (EBI) for October marks its sharpest fall since it was launched in June this year. The EBI decreases to 33.2 % from 51.9 % in the previous month. That means that only every third among those surveyed now thinks that one country or more will leave the euro zone within the next twelve months. In July the EBI had reached a high at 73.3 %, and has gone down since. The October survey was conducted from October 25th to October 27th among 922 investors.

The main driver behind this development should be the signs that the so called Troika (EU, IMF, ECB) is going to grant Greece more time for improving its budget. Also, the German government has recently become much more conciliatory as far as the southern country is concerned. Apart from that, no important positive news was registered during the past four weeks. But even the absence of negative ones may have let the EBI fall – all the more, as in the months before the ECB and the German Constitutional Court had laid the foundations for the continuation of a euro zone in its current shape.

Among those investors who think that the euro zone is going to lose members it is still the great majority that expects Greece to exit the common currency. Interestingly, 100 % of the euro skeptics within the group of institutional investors is of that opinion. The euro pessimists among the surveyed private investors are a little less Greece-centred. In total, the probability for a so called "Grexit" calculated from all investors amounts to – surprisingly low – 31.4 % after 48.8 % in September. The highest EBI for Greece so far was registered in July with 70.7 %.

Overall, according to the survey the number of countries which might abandon the euro has shrunk. Among the periphery countries Cyprus (9.9 % after 13.6 %), Portugal (4.1 % after 6.0 %) and Spain (3.7 % after 4.9 %) are stated the most often, among the core countries it is Finland (3.9 % after 5.2 %) and Germany (2.9 % after 4.1 %). For the Benelux countries, for France, Estonia, Slovakia and even Ireland the exit probability now lies below 0.5 % in each case. These countries obviously do not play any role for the polled investors as far as a euro breakup is concerned.

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