Make or break time for Europe, OFI AM conference hears

French manager OFI Asset Management’s 2012 conference exposed a range of views on growth in the eurozone, the US and emerging markets this year.

Optimism was the word of the day at OFI Asset Management’s January conference. “People are scared and nothing is stable, but we need to try and remain optimistic,” declared Gérard Bourret, OFI’s chief executive.

“Out of a cheery, hardworking and optimistic team and a pessimistic, cowardly one, who would win? If you do not believe you can succeed, failure is certain.”

Thierry ­Callault, Bourret’s ­colleague, was more reserved but echoed the same message. “2011 felt like a very bad trip and 2012 is the year that could make or break Europe. Hopefully, our little bit of optimism will enable us to get through it,” he said.

Their bright attitude appeared to be shared by the 600 ­conference ­participants, which included ­investors, fund selectors, fund ­managers and journalists.

A live survey revealed what they expected 2012 to have in store for the eurozone: 28% thought it would ­progressively climb out of crisis, another 45% said eurozone growth would be supported by emerging market growth, 21% said it was more likely to experience recession, and less than 7% said a eurozone break-up was the most probable outcome.

According to guest speaker Patrick Artus, head of economic research at Natixis, the correct answer is that the eurozone will grow with help from both the emerging markets (which will also encourage upwards ­commodity prices) and the US (as its quantitative easing programmes have worked effectively for the US economy).

“It’s not all bleak news for the eurozone, despite Anglo-Saxon attitudes towards it,” Artus commented.

Its two biggest problems are Greece, which will not rein in its public ­deficits, and Spain, which has become a thorn in the side of the eurozone, Artus added. He ­recommended avoiding asset classes reliant on internal demand and ­prioritising assets set to benefit from emerging market, US and ­commodities growth.

Jean-Pierre Petit, president of French research house Les Cahiers Verts de l’Économie, said 2012 would be dominated by three Rs: ­recession in Europe, resilience in the US, and reduced growth in Asia and the emerging markets.

Petit said there would be an ­industrial slowdown in the BRIC economies, despite retail sales accelerating. By contrast, the US has shown its resilience having bounced back from the S&P downgrade shock last August.

Petit attributed this to the strength of US corporates and the fact that more than two million jobs have been ­created in the US since the financial crisis began.

 

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