ABN Amro Buys European Stocks on ECB Crisis-Fighting Move
ABN Amro Private Banking bought European equities after policy makers unveiled a bond-buying program to tackle the debt crisis, leaving the firm with a so- called overweight position for the first time since 2010.
ABN Amro’s wealth-management unit, which manages 155 billion euros ($203 billion) for clients, started buying equities after European Central Bank President Mario Draghi announced the unlimited asset-purchase program on Sept. 6. The company was last overweight Europe, meaning it held more of the region’s stocks than are represented in global benchmarks, from July to October 2010.
“There is a huge incentive to put money to work,” Didier Duret, chief investment officer of ABN Amro Private Banking, said in a telephone interview. “The market has to recognize that the institutional problems of Europe will be tackled. From an investment perspective, it is very important to start to look at the end game.”
Since the money manager bought European stocks on Sept. 10, the benchmark Stoxx Europe 600 Index (SXXP) has climbed 1.2 percent to touch a 15-month high, boosted by a third round of quantitative easing by the Federal Reserve. The purchases, which included financial shares, sent ABN Amro’s total asset allocation in equities to overweight and pushed its holdings in U.S. stocks to underweight.
The Stoxx 600 retreated 4.4 percent through June 4 amid growing concern that debt burdens in Greece and other peripheral European nations will force them to leave the euro. The gauge has since rallied 18 percent, bringing this year’s advance to 12 percent.
We have “extremely accommodative monetary conditions and it will have an impact,” said Duret, who is based in Geneva. “Considering people have been on the sidelines for a year now, there is still more upside to come. There is a lot of money still to be invested.”
Didier said ABN Amro Private Banking has reduced cash holdings over the last month and a half. The wealth manager is also overweight emerging-market equities and bonds, corporate debt, hedge funds and U.S.-listed real estate.
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