Nearly two-thirds of institutional investors expect Portugal or Ireland to restructure its public debt, according to a survey by Barclays Capital of 700 institutional clients.
Four in ten think that at least one country will leave the euro-zone this year. That’s down from almost half in Barclay’s December survey but still a level Barclay’s describes as “uncomfortably high.”
Despite these worries, respondents are not preparing for a global financial crisis.
“Importantly, though, these euro area concerns are not expected to have a global impact. Most respondents believing the restructuring would have limited market consequences,” Barclays writes in its note.
This could explain why the investors surveyed by Barclays are pretty confident. Thirty-seven view equities as likely to be the strongest performing asset class, with only 18 percent seeing credit as the strongest. That’s a pretty dramatic turnaround from December, when the numbers were the inverse: 34 percent saw credit as strongest, and 19 percent equities.
Unfortunately, it’s not clear whether the results of this survey do a very good job of predicting what will actually happen in the markets.
“Investors were also relatively upbeat about prospects in the first quarter survey of 2011, but it turned out to be a very difficult year. Will the same happen again this year?” Barclays asks.
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