11/11/2011
By Ilonka Oudenampsen
The euro will not collapse, despite current problems in the eurozone, according to 81% of 120 attendees of a recent Schroders Investment Conference
However, 59% considered European structural problems as the most pressing global macroeconomic issue today, followed by US structural problems (22%).
A ‘managed’ default of Greece and recapitalisation of banks at a national level is the best path for Europe according to 62% of the 120 intermediary clients from Europe, the Middle East and Latin America.
In light of recent market volatility, the respondents have a positive outlook towards certain government bonds and gold. Almost half believe that German, UK and US bonds will yield between 2-4% in five years’ time and 31% believe the same bonds will yield 4-6%. Attitudes towards gold are also optimistic with almost 40% believing that the gold price will reach at least $2,000 per ounce in two years.
Peter Beckett, head of international marketing at Schroders, said: “The ongoing uncertainty around Greece and Italy as well as the fear of further contagion is causing markets to be driven by daily or hourly swings between fear and euphoria that are entirely unrelated to traditional company fundamentals.
"It is therefore not surprising that investors have strong views on how to resolve the Eurozone problems and are optimistic towards ‘safe haven’ asset classes such as gold and government bonds from stronger countries. Gold in particular offers important diversification as well as protection against uncertainty, inflation and concerns over the value of the US dollar, sterling and euro, which are all prevalent in current markets.”
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