Not All European Nations are Created Equal
Be wary of lumping all European nations into one category; the differences between them can be significant and spell either opportunity or reason for extra caution, as this interactive graphic suggests.
The Greek elections have put an end to six weeks of uncertainty with pro-eurozone, pro-austerity parties collecting just enough votes to form a coalition government. But that doesn’t mean that headlines about Europe and its sovereign debt crisis will stop rattling investors nerves any time soon. Spain’s bank bailout hasn’t solved that country’s fiscal woes, and Italy is lurking just offstage with its own problems. And it’s a near certainty that Greece will be back in the spotlight before too long. Still, while investors tend to lump European nations together in one large group (preparatory to slapping a big “Avoid – Danger” label on their stocks and most of their bonds), not all are created equal. True, some on the periphery of the eurozone probably deserve to be handled with caution when it comes to their stocks and even their government-issued bonds. But simply because a country happens to be geographically located in Europe doesn’t mean that contagion from the sovereign debt crisis affects it any more than it does, say, India, China or Mexico. The fundamentals of all European nations aren’t equally bearish.
The following interactive chart, provided by Datastream, gives you the chance to delve more deeply into what distinguishes one European nation from its neighbor, whether it is their economic growth, youth unemployment rate or the performance of their banks. (While Irish banks have lost virtually all of their market capitalization since 2007, Czech banks appear relatively robust robust; Poland has logged double-digit economic growth since 2007, despite the financial crisis and the ensuing debt crisis.) Germany isn’t the only country whose bond yields have been compressed by investors’ flight to safety: those of Sweden and Denmark are at rock bottom levels. And it points to intriguing anomalies: despite Hungary’s 10.9% unemployment rate (and the fact that 26.7% of workers under 25 are jobless), the country’s retail confidence level has climbed since the end of 2007 while it has plunged in an apparently more robust economy like Sweden.
Alpha Now invites you to go beyond the headlines and broad market generalizations with this interactive chart.
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