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German investor sentiment deteriorates amid coronavirus fears

By Michele Maatouk

Date: Tuesday 18 Feb 2020

German investor sentiment deteriorates amid coronavirus fears

(Sharecast News) - German investor sentiment deteriorated sharply in February as worries about the coronavirus and recession took their toll, according to the latest survey from the ZEW Center of European Economics Research in Mannheim.
The ZEW's economic expectations index slumped to 8.7 this month from a four-year high of 26.7 in January. Economists had been expecting a reading of 21.5.

Meanwhile, the current conditions gauge fell to -15.7 from -9.5, versus expectations of -10.0.

ZEW President Achim Wambach said: "The feared negative effects of the coronavirus epidemic in China on world trade have been causing a considerable decline of the ZEW indicator of economic sentiment for Germany.

"Expectations regarding the development of the export-intensive sectors of the economy have dropped particularly sharply. Besides, the end of 2019 and the beginning of 2020 saw a worse-than-expected development of the German economy. Both the downward revision of the assessment of the economic situation and the downturn in expectations show clearly that economic development is rather fragile at the moment."

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "This is the first clear sign of a hit from the coronavirus in the eurozone sentiment data. The month-to-month drop in the expectations gauge was the biggest since the middle of last year, and this headline usually doesn't swing by that much on a monthly basis.

"The decline is much bigger than implied by the relatively resilient Sentix, though it's fair to assume that respondents to this survey hadn't had time to fully incorporate the risks. They probably still haven't in general, however, and we expect the headline investor sentiment surveys to dip further in the near term as major listed corporates start to count the cost of sharp slowdown in China's economy in Q1. Apple's warning on its Q1 earnings and unit supplies overnight is just one example, but it is representative, we think, of what comes next."

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