ZEW-Financial Market Tests: Financial Experts Recommend European Shares

Next year investors should buy primarily European shares: In a model portfolio with shares from Europe, North America, Japan, and the Emerging Markets European values should account for 50 percent of the volume. Investors should invest 28 percent of their portfolio volume in US shares, twelve percent in Japanese securities, and 10 percent in shares of the Emerging Markets.

These are the findings of a survey conducted among 400 financial analysts and institutional investors. In November, the Centre for European Economic Research (ZEW) in Mannheim asked them in the ZEW Financial Market Test for information on the optimum portfolio composition for the year 2001.

When selecting a portfolio particularly for Germany, financial experts recommend investors to invest 67 percent of the portfolio volume in shares and 33 percent in the bond market. Dax values should be weighted about three times more than securities of the New Market or other shares. What is interesting is the comparatively high proportion of other shares in the sample portfolio. Already this year values that were ranked in the second place, i.e. for instance the M-Dax, have done better than the heavyweights in the Dax and Nemax. According to the analysts the bonds should be spread across their lifeterms. The survey results do not indicate any distinct preference for short-term or long-term bonds. This suggests that financial experts do not expect any dramatic changes in the yield curve for next year.

Contact

Dr. Felix Hüfner, E-mail: huefner@zew.de

Birgit Sasse, E-mail: sasse@zew.de