Rough Sailing Investment Trends Due to Stimulus Plan of the European Central Bank
Published By : 02 Mar 2015 |Published By : QYRESEARCH
The ECB (European Central Bank) has plans of starting a huge program pertaining to monetary stimulus in the upcoming month. This however has caused money to get channelized in strange and newer ways. On Thursday, for the very first time German bonds with maturity period of seven years were traded at a negative rate of interest which showed that investors okay with temporarily losing money and funds in order to own the bonds.
Allianz, a Germany based insurance company that basically invests in securities and bonds had declared on Thursday, that the company will invest several billion Euros that will be channelized towards property and real estate. This would be an addition to the portfolio which involves a French shopping mall and UK military garrison. Both these developments showed that investors were making efforts to cope up with the recent impacts of the monetary policy of the ECB which will in a way help the eurozone. However, quite a few problems have already been created for insurance firms and other similar bodies for directing their respective funds in highly safe assets.
Conventionally speaking, risk aversive investors mostly opt for government bonds. However, the bond rates have got a major boost owing to the plans of the central bank to start purchasing debts and government bonds to the tune of 60 billion Euros on a monthly basis. These bonds, which mainly belong to countries such as Finland and Germany have taken these countries into a negative area. In simple terms, the fears that prompted the country’s central bank act a certain way owing to the fears of deflation which involve fall in prices and wages have also prompted the bond investors react in a way that show that investments could lose their value in future.