Eurozone Funds $142 Billion Away From 2007 Levels

EuropeAlexas_Fotos / Pixabay

The Eurozone is $142 billion away from the 2007 levels seen in the equity and debt funds, Societe Generale’s recent report reveals.

Eurozone Funds $142 Billion Away From 2007 Levels

Alan Bokobza and team at Societe Generale SA (EPA:GLE) feels the gap is narrowing fast, thanks to large inflows witnessed in both equity and bond funds.

Eurozone Gaining Increasing Popularity

Societe Generale’s analysts note that the Eurozone is proving to be a favored destination for investor flows.

With good inflows witnessed in equity funds consisting of ETFs and Mutual Funds, the Eurozone is fast bridging the gap with its 2007 levels, with the gap standing at $87 billion.

The Eurozone seems to be back in favor on the bond side as well, as it requires $55 billion to bridge the 2007 level gap.

The following graph illustrates the cumulative net inflows into ETFs and Mutual Funds in both equity funds and bond funds category since 2007. The graph highlights how the 2007 level gap is getting narrowed over the years:

Eurozone Gap to 2007 level narrowing

Factors favoring the Eurozone

Alan Bokobza and his team at Societe Generale points out several arguments are currently favoring the Eurozone. For instance, systemic risk in the Eurozone is well contained, and external imbalances have been corrected speedily.

Societe Generale analysts also point out the cocktail of less austerity in exchange for structural reforms is proving relatively powerful.

The analysts also note that with German elections finishing, one can witness a pick-up in activities towards banking union plans. Societe Generale analysts feel that the banking union would facilitate further reduction of spreads and equity risk premiums, particularly at the periphery.

Positive Inflows Into Bonds And Equities

As the following table reveals, Europe has witnessed positive net inflows since the beginning of this year. While equity funds witnessed net inflows of $17.4 billion, bonds have seen net inflows of $2.5 billion.

Eurozone-Net inflows in Bonds and Equities

The following table depicts the total net assets of various zones as of September 25th, 2013. As can be seen, Europe witnessed a strong $753 billion and $373 billion in equities and bond funds respectively.

Eurozone-Total Net Asses Sep 2013

The following graph highlights net inflows witnessed by bond funds since 2007. As can be deduced, the Eurozone has seen enhanced inflows during the past couple of years.

Eurozone-Net inflows into bonds since 2007

As in the case of bonds, the following graph reveals that the Eurozone has witnessed healthy equity net inflows.

Eurozone-Net inflows into equities since 2007

Striking a confident note, Societe Generale SA (EPA:GLE) analysts conclude the Eurozone is proving to be an attractive alternative to emerging markets and the U.S.

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About the Author

Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports

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