Rising personal debt and high unemployment could mean the Netherlands becomes the next casualty of the eurozone crisis, according to Premier Asset Management’s Jake Robbins.
The manager of the £9.4m Premier Global Alpha Growth fund said positive sentiment from European economists and politicians risked overlooking increasingly negative data emanating from countries such as the Netherlands and France.
Mr Robbins said: “Increasingly in the past few months we’ve seen this ‘leap of faith’ that the liquidity supplied by central banks is improving the environment. But if you look at countries like the Netherlands, economic data is deteriorating further.
“Most worryingly the Netherlands reminds me of the US in 2006-07 with the amount of debt secured against property when prices are falling.”
The Netherlands is currently mired in the second of two recessions it has experienced in the past four years and its unemployment rate jumped from 7.7 per cent in February to 8.1 per cent in March, the biggest monthly increase since the turn of the century.
Earlier this year the Dutch government was forced to pump €3.7bn (£3.1bn) into the country’s fourth-largest lender, SNS Reaal, after the bank sustained heavy losses from property assets. The country’s coalition government is also trying to force through stringent austerity measures to cut public spending.
In spite of this the Dutch stockmarket, the AEX index, has risen 4.7 per cent in six months. The Eurostoxx 50 index gained 7 per cent in that period.
“It is very difficult to understand why even the head of the European Central Bank [Mario Draghi] is being so positive when there is no data to support it – there is just hope, and that is not a great investment tool,” Mr Robbins said.
“Even economic data coming out of China and the US is beginning to disappoint. One of the great hopes for Europe is that these countries will boost growth here but it is looking less likely that we are going to get that.”
The manager has no exposure to domestic European stocks or economically sensitive companies such as financials, focusing instead on defensive sectors such as pharmaceuticals and consumer staples, as well as buying into south-east Asia and the US.
Elsewhere, Nick Hayes, manager of the $138.5m (£88.9m) Axa WF Global Strategic Bonds fund, said government bond levels and equity prices were sending conflicting messages about the state of the European economy.
“Europe is still in recession and economic data is not improving but risk assets have done well because liquidity is so strong,” Mr Hayes said.
“The level of yields on German bunds, US treasuries and gilts is telling you the world is in a precarious place but equity markets are saying that the world is in a better place.
“We’ll find out in the next weeks and months which one is right, but the rally [in risk assets] could continue for quite a while.”