Italy takes the lead

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The Eurocrisis creeps back into the heads of the investors in a new way. No longer Greece, but Italy is now the country that is most likely to leave the Eurozone within the year from the perspective of the more than 1,000 investors surveyed. This development underscores the importance of the referendum to the Constitution in Italy on December, 4th.

The Eurozone does not come to rest. While it looked as if a "castle peace" had been concluded a few months ago, the euro concerns are gradually rising again among investors. But this time it is not Greece that dominates the agenda. Although for example the pension funds in Hellas are collapsing, the euro exit probability has fallen to 8.48% - the lowest level since 2014.

Italy is now the focus country number 1 in the Eurocrisis! The precarious situation of the Italian banks, the political questions surrounding the Constitutional Treaty at the beginning of December, and the economic turmoil of the past have placed the country south of the Alps at the center of investor interest.

Exit probability for Greece and Italy

sentix Euro Break-up index: Exit probability for Greece and Italy

The above graph shows the historical dimension that is inherent in this signal. And it shows that this is not a one-off event, due to an up-to-date message, as we observed in the Netherlands, for example, after the Brexit decision.

Besides Italy, we also measure a disadvantageous trend in Portugal. The exit probability is not very high here, but the EBI value worsens in small but steady steps. Thus, the risk of contagion as measured in the "Contagion Risk Index" also come back to the agenda.

Exit probability of Portugal and Contagion Risk Index

sentix Euro Break-up index: Exit probability of Portugal and Contagion Risk Index

 

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 17.5% 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 1,039 individual and institutional investors participated was conducted from 26-October to 28-October-2016.

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