January’s announcement by the ECB of its bond purchase programme has been followed by good numbers. Euro-zone equities – as measured by the MSCI EMU index – were up 15% from January to mid-May after a return of 2.3% in 2014. Bond markets powered forward until May’s sell-off.

Although 0.4% quarterly growth might seem anaemic in ‘normal’ circumstances, the euro-zone’s first-quarter 2015 headline GDP growth figure has cheered investors; for the first time in since 2010, the bloc’s four largest economies, Germany, France, Italy and Spain, have all recorded a quarter of simultaneous growth.

Back in spring 2012, when the euro crisis was at its height, markets in the single currency area were bombed out; only captive domestic institutions and brave hedge funds were investing. Asset markets have experienced a strong rebound since then, with the MSCI EMU returning over 22% annualised in the three years to mid-May 2015, or 63% overall since 26 July 2012, the day of Mario Draghi’s ‘whatever it takes’ speech. Now the question is where the opportunities lie.

Back in 2012, Greece was the sickest of several sick men of Europe; now it is a crisis-ridden loner with no credible recovery trajectory. Greek 10-year yields are at about 20% and an exit from the euro remains a possibility. If it does occur, the contagion effect on the rest of the currency union is unclear, despite a widespread perception that a ‘Grexit’ would be less threatening at this stage than a few years ago.

If the outlook has improved in terms of headline numbers, what of the fundamental reforms that Europe desperately needs? This is a slower work in progress. 

One key reform is the on-going diversification of Europe’s lending market away from banks. Several national initiatives, including in France and the Netherlands, have sought to attract pension fund and insurance capital to the SME sector. Securitisation would help stimulate lending and diversify credit transmission, but regulatory suspicion of asset-backed securities (ABS) is hindering a market that is stuttering back to life.

There are hopes that European Long-Term Investment Funds will prove to be more successful than the ECB’s ABS purchase programme. For that to happen there will need to be projects. Governments will need to provide infrastructure opportunities, tens of thousands of businesses, large and small will need to have the confidence to plan for the future, and consumers will need to spend.