European policy measures fail to inspire confidence
Since the last update, global investor sentiment initially recovered in October as the announcement of Europe’s ‘comprehensive solution’ buoyed market confidence. This resulted in most European markets recording 20%+ price gains (see Table 1 at link provided) as investors sought to buy seemingly undervalued companies.
Europe’s ‘comprehensive solution’ lacks creditability however, the European situation has progressively become more problematic and positive sentiment dissipated when the analysis of the rescue package disappointed investors on several fronts. These areas included how the €1trillion package would be funded and how banks would meet their capital requirements in the wake of a 50% write down of Greek debt holdings.
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