Complete Eurozone Break Up Unlikely With Backing by ECB - Economist

KUALA LUMPUR, June 22 (Bernama) -- An economist with CIMB Investment Bank contends that a complete break up of the eurozone seems unlikely given the high economic cost and financial ramifications despite grave concerns over the euro crisis which is hindering global recovery. Lee Heng Guie, Regional Head of Economics, CIMB Investment Bank, said: "We believe the European Central Bank (ECB) will stand ready to support the European monetary system, providing emergency liquidity and funding to avert a financial catastrophe." The prevailing eurozone crisis is a risk that threatens to undermine the still-moderate pace of the US recovery, he said in his presentation entitled "Bridge Over Troubled Waters" at the 68th Financial Advisory Series (FAS) on Global Risks and Opportunities organised by CIMB Preferred. CIMB Preferred is the priority banking service of CIMB Bank Bhd. The FAS series featured two prominent speakers -- Lee and Albert Tse, Head of Intermediary Distribution of South East Asia, from Schroders, who discussed the risks of the global market and opportunities available for investors. Tse, who spoke on the topic "Can Crisis Present an Opportunity?, said the present economic conditions should not be construed as "the end of the world" as the capital markets have already priced in the risks and the possible recession this year. There were opportunities in the Asian dividend-yielding stocks as the Asian equity valuation has corrected significantly, he said, adding that mixing the portfolio with Asian corporate bonds would help to diversify risks. Asian countries are expected to remain resilient as the central banks have sufficient "ammunition" in terms of monetary and fiscal policies to respond and stimulate their economies when the need arises, he said. Lee also said China’s slowing economy remains an important regional risk to Asian countries. "Gross Domestic Product growth of Asian countries, including China, India, South Korea and Taiwan, have lost their momentum due to weaker export growth on the back of poor electronics demand. "Therefore, if the euro-area crisis deepens and becomes disorderly, the impact could be significant," Lee said. He however said Asia still had room for fiscal and monetary manoeuvres though it varies among countries. The monetary policy should remain accommodative to growth, he added. -- BERNAMA