An exchange traded fund tracking German stocks bounced Tuesday amid hopes China would help prop up troubled bond markets in Europe.
“European markets have rebounded today in part due to German Chancellor Merkel’s comments that she is committed to keeping the Euro area intact,” said ETF manager BlackRock. “Despite possessing better economic fundamentals than most European counterparts, Germany’s stock market has been hit hard, down near 8% on the month. Today, the German DAX outperformed the broader Euro Stoxx 50 index and closed just off its highs.”
The iShares MSCI Germany (NYSEARCA:EWG) is feeling the heat as Greece tries to avoid a default. Merkel’s comments came after reports Germany is preparing its banks in case Greece can’t repay its debts.
“It is not very helpful if German government members start talking out loud about a Greek insolvency,” the German edition of the Financial Times warned, reported by The Globe and Mail. “Even those members of the coalition who are skeptical… should have realized by now that such debates produce exactly the opposite of stability in the Eurozone.” [Germany, Italy ETFs Lose a Third of Their Value]
On Monday, German Economic Minister Phillip Rosler said “an orderly bankruptcy of Greece” should be considered. [Germany is the Worst Performing Country ETF in August]
Economists agree that a stable solution to the euro does require commitment by Germany and other major economies in the Eurozone. A solution would include costly initiatives for Germany to share the debt and fiscal instruments from neighboring countries, reported Doug Saunders for The Globe and Mail.
iShares MSCI Germany ETF (EWG)
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Tisha Guerrero contributed to this article.