However, investors should be more cautious with their France and Italy outlook. France and Italy face mounting pressure from high debt, slow growth, unemployment, poor public finances and lack of reforms to remedy the situation, reports Satyajit Das for the Financial Times. France is EUFN’s second-largest country allocation at a weight of 12.3%.
The two countries’ problems are more structural in nature, and the governments have not intervened with any type of meaningful reforms to remedy the situation. For instance, the two are struggling with high wages, inflexible labor markets, high welfare benefits, large public sectors and restrictive trade practices.
“Nonperforming loans – those that are at least 90 days overdue or have been previously identified as unlikely to be repaid – accounted for 5.6 percent of total loans held by European lenders at the end of June, the regulator said in a new report on Tuesday. That was down from 6.1 percent at end of December,” according to the New York Times.
iShares MSCI Europe Financials ETF
