Saving / investing in northern Europe

edindie

Hi All,

A little discussion for the collective; I want to hedge at least a little against the possibility of a huge rise in the value of the euro. As I see it, there is a significant risk that the crappier countries will fall out of the euro within the next 24 months which will mean that there is only the better countries left in it, therefore it will appreciate significantly in value.
What way do you think would be a good way I can expose myself to the euro, but make sure it is Germany / Swiss / nordic etc euro and not the Greece / Spain / Portugal euro?

One option would be to buy a bond or two in euro denominations in Swiss or German banks. (pros / cons of this? Relatively safe, low interest rate...?)

Other one would be to buy shares in a company based up there, or who's business / assets are all based there (so therefore not banks or the larger companies - or perhaps lidl or something counter cyclical like that??)

A third is to buy something that would perform well if Greece or whoever went down the pan, but it's difficult to think of something like this that isn't going to expose me to the risk of having my investment forcibly drachma-rised.

I'm not keen on derivatives unless they are simple (definitely not synthetic). What else can you think of? Housing? Corporate bonds? I imagine I'll be exposed enough to UK property prices without wanting to invest in foreign ones too (and this would probably be for a much shorter term).

What do you think? I am aware there are significant other areas of risk that need examining, but this thread is specifically to discuss this one.

Reaper

Given you think the Euro will strengthen you can play the currency if you want. A simply play would be to buy an EFTS such as ETFS Long Euro Short US Dollar ETC (Sterling) ETF
That says you think it will get stronger compared to the dollar. There is a 0.39% annual management fee.

Of course the Euro might break up with the stronger countries leaving (a better solution in my opinion but I think much less likely). That would allow the Euro to fall in value and in doing so help the weak countries recover.

edindie

Reaper wrote: »

Given you think the Euro will strengthen you can play the currency if you want. A simply play would be to buy an EFTS such as ETFS Long Euro Short US Dollar ETC (Sterling) ETF
That says you think it will get stronger compared to the dollar. There is a 0.39% annual management fee.

Of course the Euro might break up with the stronger countries leaving (a better solution in my opinion but I think much less likely). That would allow the Euro to fall in value and in doing so help the weak countries recover.

That's why I was thinking of a location based investment, if I had a German bank account it wouldn't matter if Germany dropped out or if spain dropped out, the effect on the currency would still be the same.

It's just vanillia savings accounts are pretty boring; so I was trying to think out-loud about some more interesting / effective ones.

innovate

edindie wrote: »

..... but make sure it is Germany / Swiss / nordic etc euro and not the Greece / Spain / Portugal euro?

I reckon anything around the Euro is highly speculative - way to volatile a scenario for my liking and that's really all I can comment on the subject.

Did notice mention of a Swiss euro - Switzerland use the Swiss franc. Also, the "nordic euro" is used in Finland only. I.e. some very stable & prosperous nordics such as oil-rich Norway are not using the euro.

srcandas

I can imagine a multi step process:

1: time arrives of massive uncertainty. For example June arrives and still there is no Greek government in place to negotiate one way or the other thus running out of money as IMF and EU conditions cannot be met. Such uncertainty might lead to many running to the dollar, Swiss franc or even the pound (although in reality the pound may be impacted negatively as well).

2: Then a way forward is found and only upon it starting to be implemented would the Euro start to recover.

3: If Greece successfully (as painful as it will be for them) bailed perhaps this would trigger an exit for Spain (and presumably Portugal as it is rather dependent on Spain) who would jump ship. This would unsettle the banks and thus the Euro.

4: Once settled then the Euro may start to rise based on its stronger average economy and decreased unemployment.

5: Then the immigrants from Iberia and Greece arriving on mass in the Eurozone might see the Euro troubled again as the whole EU is threatened.

Well you get the idea. A large number of swings a bit like the markets recently. So I'm not sure it is a matter of depositing in Euros **. It is more a case of milking the volatility.

As for me I'm still looking at De la Rue as printers of money being big winners

** (seems odd as my Spanish family are passing their euro savings to me to be deposited in sterling with more security and better interest rates than they can find at home )

edindie

srcandas wrote: »

As for me I'm still looking at De la Rue as printers of money being big winners

That's quite a good idea, if anyone steps out they will have to get some money printed.