Euro Assets Are Beginning to Show Their Potentials

Coronavirus outbreak overseas will likely trigger global financial market’s systematic adjustment. Compared with that during the 2008 financial crisis, the financial systems of major global economies are more steady, and euro assets can be increasingly prospective.

Though the Eurozone is facing a recession, the risk of a serious crisis is small. Stricter measures implemented by countries across the world to control spreading coronavirus and global coordination of counter-cyclical monetary policies will offer powerful support for containing the outbreak and the economic rally afterwards.

European stock market has squeezed out bubbles after the heavy slump. Stock prices have reflected pessimistic expectation of economic recession, and with major indices falling to historical bottom range, euro assets are beginning to show their potentials in investment portfolios.

In the short term, once the global outbreak alleviates or reach a turning point, pricing of those competitive European companies will likely return to fair level. Meanwhile, the Fed’s unlimited QE recently will help solve the US dollar liquidity crisis in the short term, but lead to the dollar’s depreciation in the long run.