German investors digest Brexit shock | Business| Economy and finance news from a German perspective | DW | 16.08.2016
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Business

German investors digest Brexit shock

The mood among German institutional investors has rebounded in August as the initial shock over Britain's vote to leave the European Union has begun to ease and outlooks for Germany's economy have improved.

The German Investor Confidence Index released by the ZEW economic institute on Tuesday gained 7.3 points to stand in positive territory at 0.5 points in August, recovering from a massive 26-point slump in July that had brought the index to minus 6.8 points.

Any index reading above zero indicates optimism among the 214 German institutional investors and analysts polled by ZEW, while a reading below that level means they are pessimistic about the country's economic development.

ZEW president Achim Wambach said the index for August showed a "recovery" from the Brexit shock. "As before, political risks within and outside of the European Union are weighing on an optimistic economic outlook for Germany," he said in a statement, adding that there were "further uncertainties with regards to the ability of the EU banking sector to withstand shocks."

Britain's decision in June to leave the EU initially rocked financial markets, sending shares and investor morale plunging. In the course of the past few weeks, however, fears of an economic downturn have been easing, the ZEW poll showed.

Ullrich Wortbach, analyst with German regional lender Helaba described the increase as "slightly disappointing" in view of the recent market recovery, but added: "On balance, a majority of positive assessments signals a rise in German business confidence in August, too."

And Thomas Gitzel from VP Bank told the news agency Reuters that financial investors were forced to revise their pessimistic outlooks about Brexit, which had failed to create much financial uncertainty.

In ZEW's sub-indexes measuring financial market players' view of the German as well as the eurozone's economy, sharp improvements were also visible. While the outlook for the 19-nation currency bloc jumped 19.3 points to 4.6 points, assessments of Germany's current economic situation rose 7.8 points to a higher-than expected 57.6 points.

Nevertheless, the overall ZEW indicator has remained well below its long-term-average reading of 24.2 points.

uhe/jd (AFP, Reuters, dpa)

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