Has European Political Risk Been Priced In?

Published 19-Apr-2017

With Europe’s next election milestone due this month in France, we wondered how investors are processing political uncertainty across Europe: everything from the triggering of Article 50’s official Brexit countdown for the UK to Greek debt talks over the summer, German elections in September, and the possibility of Italian elections in the not-so-distant future. So far European markets seem to be shrugging these risks off, with consumer confidence measures showing renewed strength. However, the recent surge of far-left candidate Jean-Luc Mélenchon in France suggests there could be more surprises to come at the ballot box in an event-packed European calendar. Bill Street, SSGA’s Head of Investments for EMEA, gathered some of our European-based investment experts to ask how global investors can position themselves for potential political turmoil.

Key Points

  • European market indicators look good, despite political risk
  • Le Pen win would cause significant market repricing
  • Investors should consider volatility protection, currency hedging and diversified bond exposure with a tilt toward quality

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