FRANKFURT: Sentiment among investors in Germany improved sharply in October, the ZEW economic institute said on Tuesday, lifting the indicator out of its post-Brexit doldrums.
ZEW’s headline investor confidence index hit 6.2 points in October, an increase of 5.7 points over September and beating the 4.0 points analysts surveyed by Factset had predicted.
The barometer remains well below its long-term average of 24.1 points.
The result was “very positive, and points to a thoroughly robust development of the business cycle,” ZEW president Achim Wambach said in a statement.
But Wambach warned of “a few political and economic risks” that could still be weighing on the index, including “dangers for the German banking sector”.
German and global investors have eyed Deutsche Bank, the country’s biggest lender, with concern in recent weeks as it negotiates with the US Department of Justice over a $14-billion fine demand.
But other banks in Europe’s largest economy are struggling too, complaining of the crowded sector’s intense competition and low interest rates set by the European Central Bank cutting into profits.
“Easing fears about the effects of Brexit have more than offset concerns about the wider implications of Deutsche Bank’s troubles,” analyst Jennifer McKeown of Capital Economics said.
While “broadly encouraging… the index still points to a slowdown in German GDP growth,” she went on, noting that the ZEW measure has failed to match the bounding business confidence index from the Ifo institute.
Beyond Germany, investors’ expectations for the economies of eurozone neighbours also saw a positive turn, gaining 6.9 points to stand at 12.3.
