Word: euroland
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Dates: during 1998-1998
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...Bluford Putnam, president of CDC Investment Management Corp., the U.S. subsidiary of a giant French-based money-management concern, Caisse des Depots et Consignations, strongly disagrees. His scenario: the countries of "Euroland," as the 11-nation currency bloc is being called, will focus more than ever on pumping up their domestic economies, which are suffering from slow growth and high unemployment. Though the new European Central Bank will officially be independent of any national government, political leaders of the 11 countries will be pressing the bank to lower interest rates and keep them down, in coordination with the U.S. Federal...
...Euroland's newly unified financial markets--highly liquid and investor friendly--will rival those of Wall Street. Meanwhile, greater ease of movement for factories and goods will force euro-zone companies to become more competitive and attractive to investors. And with the euro, American businesses and travelers could save as much as 50% of the transaction costs they now pay to convert dollars into multiple European currencies. Says David Bowers, a European investment strategist with Merrill Lynch in London: "This will be the biggest shock to the global financial system since the move away from fixed exchange rates...
...moment, shares of European companies are priced as bargains, relative to those of American firms with comparable earnings growth. But the European market is likely to boom as new money flows in. And the probability of a weakening dollar means Americans who move money into Euroland now might lock in exchange-rate profits. "There is a case for diversifying your portfolio into a currency area that provides an alternative to the U.S.," says Merrill Lynch's Bowers. "But there's no shortcut: you still have to find good companies." In the current European climate, the most promising sectors include consumer...