The Fundamentals of Panic

John Beck, co-director of Franklin Templeton’s International Bond Group, discusses his outlook for the eurozone now that investors have emerged from panic mode

Franklin Templeton Investments 5 October, 2012 | 6:00AM
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This article is part of Morningstar's "Perspectives" series, which is a series of articles written by third-party contributors.

The whims of investor sentiment often hold sway over the markets, even if fundamentals might seem to dictate otherwise. A “herd” mentality can take over and certain asset classes or regions fall out of favuor, whether rightly or wrongly so. In the first half of this year, the investing herd was stampeding out of Europe, with its crushing debt crisis and specter of a euro breakup. Today it appears sentiment is shifting direction—toward the euro’s survival—so will the herd make a U-turn? John Beck, London-based SVP and co-director of Franklin Templeton’s International Bond Group, is cautiously optimistic, but he’s also a realist about the time it will take for Europe to recover. 

Improvements are Visible

Investors have grown impatient waiting for the eurozone economies to recover, but Beck reminds us that patience is a virtue. He says it is impossible to go around the time required for the recovery process, but he is already seeing improvement in three key areas: the banking system, sovereign debt, and politics.

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Franklin Templeton Investments  is one of the world's largest asset management groups, offering UK investors a range of over 80 funds across different market sectors.