Traders Shouldn’t Dismiss Opportunities Created by Eurozone Crisis

(eToro Blog) Much has been made over the past many months of the importance of fixing the Eurozone. Clearly, it needs fixing; several of the member states are on the brink of bankruptcy, there’s talk of withdrawal from the E.U., austerity is all the rage (literally and figuratively) and growth is slowing nearly everywhere. The crisis is impacting the global economy, that is also clear, and eventually the powers that be will find a way to right the wrongs and restore order.

While the Euro may be steadily depreciation, as far as investment opportunities, all is not lost. While the E.U. policy makers try once again to sort themselves out at the upcoming European Council meeting, investors can still take advantage of the mess there which is a long, long way from being cleaned up. As has often been said, crisis breeds opportunity, and even with the bleakest outlook, they can be found right under an investor’s proverbial nose.

Let’s look first at the United Kingdom. Yes, they too are in the midst of their own crisis, but the government is working diligently to overcome their budget deficit, and has been steadfast in their conviction that they be independent and exempt from legislation and policy which would favor Europe. Though the government has been criticized by several E.U. policymakers for that conviction, the data doesn’t lie; the Pound Sterling has continued to hold much of its value relative to the Euro while the London FTSE has gained more than 8% in value over the past year.

Germany, though a key and very important member of the Eurozone, stands to benefit as much as it risks. While the German government and its citizens have been highly critical of the bailout loans that were given to Greece, Portugal and Ireland, it should be noted that the financial assistance was, in fact, a secured bilateral loan, and during the negotiations the repayment terms and interest rates favored Germany, which assumed the largest risk. Germany stands to profit handsomely from a protracted crisis. The German DAX has gained a whopping 25.9% over the past year, thanks in large part to the European Central Bank’s commitment to quantitative easing.

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