European Central Bank’s asset purchase program is attracting investors to European high yield market. After years of negative fund flow, segment is back in business this year.
- Chart from JP Morgan, shows Investors are pouring in billions of Euro worth of money. In January alone flow was more than € 1.5 billion.
Investors are expecting similar performance that of US, when US Federal Reserve’s record $ 4 trillion balance sheet expansion lead to massive yield depression in high yield sector, with investors earning huge profits.
ECB’s balance sheet expansion is smaller compared to FED, however that might not deter investors for jumping in.
Weaker Euro is also expected to help companies operating in the segment.
Equities will reap benefits too –
High yield investment has also associated risk, as any adverse condition namely political scenarios might sour the party early. Latest fund flow statistics when released might provide cues on how these investors are assessing political risks from Greece and upcoming election in Spain.
- Equity investors can buy equities of the companies in this sector.
- They might benefit from investing in these companies, as their cost of borrowing would come down significantly by end of this year.
The material has been provided by InstaForex Company – www.instaforex.com