Just as it looked as though the global economy was on the way out of the great recession and investor confidence was returning, things turned negative. Yet again, it has been a shock from the eurozone – this time the ill-executed bailout of Cyprus – that has unnerved international investors. While it is early days and the implications for global markets are hard to evaluate, it is nonetheless clear that investors have received a reminder that this crisis is not over yet and the situation in the eurozone in particular remains the biggest risk to the global recovery and global financial stability. It is hard to be impressed with EU policymakers’ handling of the euro crisis, so investors are likely to have lost some confidence as a result of the Cyprus debacle. So, it is clear that we can no longer assume that it is just ‘risk on’ forever and investors are well aware of this.
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Danske Bank