Warn­ing on Ger­man in­vestor con­fi­dence

The Myanmar Times - - International Business -

SEN­TI­MENT among in­vestors in Ger­many sharply im­proved this month from its post-Brexit dol­drums, data showed, but an­a­lysts warned against over­con­fi­dence.

The ZEW eco­nomic in­sti­tute’s head­line in­vestor con­fi­dence in­dex hit 6.2 points in Oc­to­ber, an in­crease of 5.7 points over Septem­ber and beat­ing the 4 points that an­a­lysts sur­veyed by Fac­tset had pre­vi­ously pre­dicted.

Sen­ti­ment had hov­ered at low lev­els in Au­gust and Septem­ber after a sharp dip in July fol­low­ing Bri­tain’s June 23 vote to quit the Eu­ro­pean Union.

Even with the Oc­to­ber in­crease, the barom­e­ter re­mains well be­low its long-term av­er­age of 24.1 points.

The re­sult was “very pos­i­tive, and points to a thor­oughly ro­bust de­vel­op­ment of the busi­ness cy­cle”, ZEW pres­i­dent Achim Wam­bach said in a state­ment.

But Mr Wam­bach warned of “a few po­lit­i­cal and eco­nomic risks” that could still weigh on the in­dex, in­clud­ing “dan­gers for the Ger­man bank­ing sec­tor”.

Ger­man and global in­vestors have eyed Deutsche Bank, the coun­try’s big­gest lender, with con­cern in re­cent weeks as it ne­go­ti­ates with the US Depart­ment of Jus­tice over a US$14 bil­lion fine de­mand.

But other banks in Europe’s largest econ­omy are strug­gling too, com­plain­ing of the crowded sec­tor’s in­tense com­pe­ti­tion and low in­ter­est rates set by the ECB cut­ting into prof­its.

The lat­est ZEW read­ing fol­lows a bat­tery of pos­i­tive in­di­ca­tors, in­clud­ing strong read­ings of ex­ports, in­dus­trial or­ders, and in­dus­trial pro­duc­tion in Au­gust and a resur­gent busi­ness con­fi­dence in­dex from the Mu­nich-based Ifo in­sti­tute in Septem­ber. –

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