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A survey by Invesco, an asset management company, shows that Europe's attractiveness has been weakened by slowing economic growth and rising political risks. This year, sovereign investors in emerging markets are planning to increase their investment allocation, nearly three times as many as sovereign investors planning to increase their holdings of European assets.
Its survey shows that Europe is losing favor in the eyes of sovereign wealth funds and central banks; nearly a third of these investors reduced their allocation of funds to Europe in 2018, and nearly a third intend to further reduce their holdings in 2019.
"Many bond yields in Europe are already negative, and European growth forecasts are relatively low compared with emerging markets, so they are less attractive from an investment perspective. When it comes to risk, the focus is on eurozone politics and Britain's withdrawal from Europe, "said Alex Millar, head of institutional investment in Jingshun Europe, the Middle East and Africa (EMEA).
The pigeon stance of the ECB and the attitude of other major central banks to keep the stimulus gates open have further plunged the yields of European benchmark bonds into negative areas, driving a new wave of interest rate searching.
European politics also influences investors'decisions.
The survey found that Britain's withdrawal from Europe affected 64% of sovereign investors'asset allocation decisions, while the internal political situation in the euro zone affected 46% of sovereign investors' decisions. Influenced by the Populist Movement and the change of leadership of the European Central Bank and the European Commission, it is believed that the political situation in the euro area is more uncertain.
As a result, only 13% of sovereign investors plan to increase their investment mix in Europe, compared with 40% of sovereign investors plan to increase their investment mix in Asia and 36% of investors plan to increase their investment mix in emerging markets.
The survey found that despite investors'concerns about trade tensions between China and the United States, China's attractiveness as an investment destination in the next three years has increased over the previous year.


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