$83 billion investor rush shows scale of Europe's predicament

War, a winter of energy rationing, and a looming recession could last longer than any American. Oh, and the newly hawkish ECB. No one knows how Europe will overcome its mounting difficulties.

Asset managers withdrew $3.4 billion from European equity funds in the week ending Sept. 7, representing total outflows over the past six months, Deutsche Bank said, citing data from EPFR Global. reached $83 billion. Those fleeing include BlackRock and Amundi SA, the region’s largest asset manager. Analysts at Bank of America and JPMorgan Chase cut their year-end forecasts for the Stox 600 and Euro Stox 50, respectively.

The woes in Europe have become particularly acute in recent months as the region looks to the threat of a recession just as central banks launch aggressive campaigns to curb inflation.By Russia The weaponization of gas supplies to the West is exacerbating an energy crisis that could lead to rationing this winter.

Already, beleaguered governments, including those with debt-to-GDP ratios of about 150%, will be forced to dig into hundreds of billions of dollars more in coffers to pay the proposed price cap. I’m here. All the while, the common currency has fallen to a 20-year low against the dollar.

Wei Lee, BlackRock’s London-based global chief investment strategist, said: “We expected a recession in Europe for months given the energy crisis, but equities have fully priced this in. I don’t think I am,” he said.

In fact, major European stock indices are down just 14% in 2022, outperforming US benchmarks and the MSCI World Index. This is because it has benefited from a weaker currency, making exports more competitive and making the second quarter earnings season resilient.

But as the continent faces what Finland called the “Lehman Brothers moment of the energy industry,” warnings are growing that a complete shutdown of Russian gas could plunge the region into recession.

Economists’ forecasts for next year’s eurozone recession are rising month by month in 2022 and could reach 60% in August, according to 11 respondents.

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