Europe's vulnerability continues

EUROPE

Sheldon MacDonald, senior investment manager at Architas, says while the economic outlook for the eurozone is showing signs of improvement, the region has inflation, election and divergence issues to contend with in 2014.

Since the end of last year, investors and commentators alike have become more bullish in their opinion the eurozone economy might have ‘turned a corner’. European equities are hitting record highs and even in the periphery, often a source of malaise and discomfort, credit spreads have been coming down, reflecting increased investor faith in the respective governments of those nations. In addition, investors have continued to take solace from European Central Bank (ECB) President Mario Draghi’s pledge to do ‘whatever it takes’ to save the eurozone economy. While market sentiment has be...