EUROPE – The euro-zone debt crisis and fears over financial repression are the chief concerns for European institutional investors, Allianz Global Investors (AGI) has found.
According to the company's latest bi-annual Risk Monitor, the most worrisome macro topic is Europe's beleaguered single currency, which nearly 55% of respondents said kept them "awake at night".
Fears over the impact of central bank policy on investment returns came a distant second.
The report also said respondents were "increasingly acknowledging the dawn of a much longer period of financial repression".
The concern weighed more on investors' minds than fears of the US 'fiscal cliff', which only 10.5% cited, or slower growth in China.
AGI said that, although financial repression only troubled half as many as the euro-zone crisis, the two topics went "hand-in-hand".
"Investors may rightly fear that, between an angry electorate and political sensitivities on the international level, they may be a far easier target for Treasuries seeking to creep out of indebtedness," the report added, referencing fears of inflation.
Discussing the report at an event in London today, AGI chief executive James Dilworth said the problem extended so far now that stock markets no longer reacted to fundamentals but rather changes in policy.
He noted that investors seeking returns could turn to emerging markets (EM) and suggested it was time to redefine which countries fell with those indices.
Reinhold Hafner, CIO of global solutions at AGI and head of the company's risklab, added that, as a means of diversification, European institutions – particularly Swiss investors – were increasingly turning their attention to Asia.
While the Risk Monitor found that, on average, 58% of Europeans were interested in an increased Asian exposure, this rose to 75% in Switzerland and 63% in the UK.
Similarly, Nordic countries – including Denmark and Sweden – had an above-average interest in the region, at 60.7%.
The Asian market is not new for the majority of investors either, as two-thirds of respondents have already allocated capital to the region's equity markets, while 38% have taken the step to seek out fixed income opportunities.