Argonaut’s Barry Norris has hailed the European Central Bank (ECB) as Europe’s “least dysfunctional institution” following its decision to purchase asset-backed securities (ABS).
Mr Norris, who manages the FP Argonaut European Alpha and FP Argonaut Absolute Return funds, said the decision to buy ABS “heralds the beginning of quantitative easing (QE) in the eurozone”.
The manager praised the ECB’s move as marking “significant progress” towards “delivering a recapitalised, functioning commercial banking system after six years of crisis”.
Following a difficult first half of the year for European equities, during which geopolitical concerns from Ukraine weighed on sentiment, the market has rebounded somewhat in the past month.
And Mr Norris said there is likely to be a further short-term “reacceleration in economic activity over the coming months”, which he put down to “the recent depreciation of the euro and a diminution of conflict in the Ukraine”.
But he said the actions of the ECB, and the forthcoming asset quality review (AQR) of banks, which is due in October, should have far more impact on the long-term prospects for the eurozone.
“So while the economic momentum has recently slowed, in part owing to seasonal factors and external conflict, we continue to be believe the underlying trends are more encouraging and that the six-year crisis in peripheral Europe and the eurozone banking sector is at an end,” he said.
