There the wood creaks

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Written by Manfred Hübner | 27 October 2014
Posted in sentix Euro Break-up Index News

The sentix Euro Break-up Index (EBI) increases significantly in October from 7.7% to 11.8%. This is the highest reading since February 2014. The rising problems on the economic front of the Eurozone start again to undermine the stability of the Eurozone. To the weak readings in the EBI even the results of the Euro zone banking stress tests, which were already known in the market during the survey, could not change anything.

The October results of the sentix Euro Break-up Index (EBI) show a significant weakness. Fears of a break-up of the Eurozone showed a remarkable increase. And this time, not only the usual suspects are a concern for investors.

The national EBI for Greece rose heavily from 5.9% to 9%. That means that about 50% more investors expect Greece to be an exit candidate within a twelve-month time horizon. It is not only the weakness of the Eurozone that lead these concerns but also country specific developments, like the possibility of pre-mature parliamentary elections.

Cyprus has rising EBI values as well. The index increased from 2.7% to 4.4% in October. The geographic relationship to Greece, the conflict of the western countries with Russia and the persistent problems within the banking sector are a concern for the investors taking part in the sentix survey.

But the biggest surprise and the most worrisome development are the rising numbers in the EBI for France and Italy. For Italy, we report the third increase of the EBI in a row and the highest reading since March 2013 (current: 2.9%). France’s numbers are a little smaller, but the current index number of 2% means an alltime high of the Euro exit probability of the “grande nation”. The continuing deterioration in the economic conditions becomes more and more a problem for the bigger countries within the Euro area.

We note positive developments for the Iberian countries. The EBI values for Spain and Portugal decreased in contrast to the overall trend with a reading below the 1% mark.

 sentix Euro breakup index and economic expectations euroland

Annotation relating to the graph: sentix Economic Expectations are inverted. Furthermore, all readings of the sentix Economic Expectations time series are shifted to a month earlier as this leads to a better fit of the survey periods of both indices. The sentix Economic Index is in most cases published in the week directly following the EBI's publication, but then carrying already the label of the following month, too.

Indicator background

About the sentix Euro Break-up Index

The current sentix Euro Break-up Index reading of 11.8% 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 its low at 7.6% in July 2014. The current poll was conducted from October 23 to October 25, 2014. 960 individual and institutional investors took part in it.

The sentix Euro Break-up Index is published on a monthly basis and was launched in June 2012. The corresponding poll is running for two days around the fourth Friday of each month. Its 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 can be found on: http://ebr.sentix.de 

About sentix

sentix is the pioneer and leading provider of sentiment analyses (behavioral finance) in Europe. Since 2001 sentix surveys on a weekly basis around 5,000 investors from over 20 countries (compris-ing over 1,000 institutional and almost 4,000 individual investors) about their expectations for finan-cial markets as well as for economic developments and their portfolio actions. The sentix survey results are representative of a broadly diversified group of investors.

sentix surveys offer the rare combination of a large number of participants, high quality and an out-standing speed with which information is gathered and passed on. All sentix indices are regularly accessible for sentix data clients just one day after the close of each poll – via the sentix website or via Bloomberg. sentix clients thus are able to use sentix data almost in real time in order to further improve performance.

sentix GmbH was founded in 2001 and today represents the basis for all the services the sentix group offers to its clients in the field of Behavioral Finance.

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