Warning on German investor confidence
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. –