Lately, attention has obviously been all about the you-know-what, yet somewhat behind the scenes, on the other side of the Atlantic, deals are being dealt. For months upon months now, the Eurozone finance leaders have been battling to put in place strict austerity measures in troubled economies to stop wasteful spending and actually collect some taxes (who woulda thought). Some of the European nations will actually be running budget surpluses by the end of next year. Now, that in no way means they are out of debt, and some of the austerity measures imposed on their economies can be pretty harsh – but they’re on the right track. Ireland has been on this path for a long time. Their stock market has fallen some 83% from their 2007 highs and has yet to even begin to recover, but the nation has been through so much devaluation they have actually started to grow again. Last year and the first half of this year, these nations’ equity markets were disasters, but look how they have “snuck up” the second half of this year:

2011 – H1 2012           H2 2012

ITALY                     -20.7%                 13.8%

GREECE                -68.2%                  18.3%

SPAIN                     -23.2%                  16.3%

IRELAND                 25.9%                  -1.9%

PORTUGAL            -30.1%                  21.4%

S&P 500                  17.2%                   1.8%

At some point these countries will begin to present opportunity. The aforementioned Ireland, (12.5% corporate tax rate!), and Italy, which hasn’t fought austerity nearly as hard as others, are beginning to garner interest – and show up in AdvisorOne Funds.

Content provided by Grant Engelbart, CLS Investment Research Analyst

2099-CLS-12/20/2012