Europe’s political risks to fore in JP Morgan AM research

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Paola Toschi and Kerry Craig, global market strategists at JP Morgan Asset Management, have studied the risks investors and markets see in politics across Europe in 2014, including the impact of austerity and the emergence of fringe parties.

Toschi and Craig suggest that while austerity measures addressed short-term risks, investors will in future want to see governments creating a healthier economic environment.

Social and political unrest has been amplified through the austerity measures adopted, and this means there could be “temporary episodes of volatilitiy in 2014”.

They conclude, however, that markets have become less sensitive to unexpected political events “relfected in the steady decline of sovereign bond yields”.

“This is good for markets and reduces volatility, but the risk is that governments will feel less pressure to push ahead with economic, fiscal and social reforms, possibly delaying progress and undermining investors’ confidence in the recovery.”

To read the full research note click here: [asset_library_tag 7582,Risks in European political landscape]



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