Great Rotation for European Assets Awaited

The potential for a “great rotation” into European stocks from bonds could be on the way, given low — or even negative — yields in government bond markets, one equity strategist told CNBC Monday.

“We still see, particularly in Europe, the potential for a great rotation,” Neil Dwane, CIO for European Equities at Allianz Global Investors, told “Squawk Box” Europe.

“We think there’s over 5 trillion euros ($5.37 trillion) now of cash and bonds that yield nothing, whereas even if you just buy a European index ETF [Exchange Traded Fund] you get a yield of 3.1 percent,” he said.

A 1 trillion euro stimulus program from the European Central Bank has helped drive government bond yields lower across the euro zone.

Germany’s 10-year Bund yield – the benchmark in Europe – yielded just 0.07 percent on Monday and could dip into negative territory this week, according to some analysts.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza