Investors confidence up after months of gloom

Investors confidence up after months of gloom
Photo: DPA
Investor sentiment in Germany rose for the first time in five months in September, data showed Tuesday, as the European Central Bank's new bond-buying programme helped boost confidence.

The widely watched investor confidence indicator calculated each month by the ZEW economic institute climbed to minus 18.2 points in this month from minus 25.5 in August.

“This is the first rise in the indicator following four consecutive months of decline,” ZEW said in a statement.

“The fact that the indicator remains in negative territory shows that financial market experts are continuing to forecast a cooling down of the German economy in the next six months,” the statement said.

“Nevertheless, the end of the downward slide in September suggests that the experts believe the economic weakening will be only moderate.”

ZEW president Wolfgang Franz said the announcement by the ECB that it would embark on a new programme to buy up the sovereign bonds of debt-wracked countries had helped to improve the economic outlook, “even if the scheme per se is somewhat problematic.”

“Nevertheless, the debt crisis has not been resolved and the economic risks remain virulent,” Franz warned.

The data were not quite as positive as had been expected. Analysts surveyed by Dow Jones Newswires had forecast a stronger gain in the indicator to minus 17.0 points.

A separate indicator measuring financial market players’ view of the current economic situation in Germany fell further to a reading of plus 12.6 points in September from 18.2 points in August. It is now at its lowest level since June 2010.

For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months.

A frequent criticism against it is that the index can be volatile and is therefore not particularly reliable.


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