Investors Still Concerned by Italy

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Investors Still Concerned by Italy

Investors Still Concerned by Italy



Even though the current stability of equity markets may not suggest that the Eurozone debt crisis is coming back to the fore, there still remains lots of political uncertainty and worry surrounding Italy.

They have yet to form a government and, just to underline how that can affect a country's economic prospects, ratings agency Fitch has downgraded them by a notch.

If the Eurozone debt crisis were to reignite, this could put an abrupt stop to the recent strength in equity markets.

Ever since 'super' Mario said he would do anything to save the euro, we have started to see a significant risk of complacency build up over the past six to nine months.

It seems that some euro member states are starting to think that reforms aren't as necessary as they were a couple of years ago and that the backing of the ECB will be enough to muddle through.

Despite the continual reminders from the ECB and IMF that reforms are required to repair the banks and rebalance the economies, the worry is that not enough is actually being done.

The Italian election is just a very small taste of what political uncertainty can do to investors.

Later this year, an unexpected result in the German elections could have even greater potential to blow things wide open.

Chancellor Merkel is currently expected to remain in power, but you can't discount a possible change at the top which could see a complete shift in how Germany deals with the Eurozone.

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By Angus Campbell, 11 March 2013


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