Due to a weakening currency (FXE, quote) and a need for capital by both the private and public sectors, the prime assets owned by European entities will continue to be gobbled up by foreign buyers in 2012.
As detailed in previous articles on emergingmoney.com and in recent articles in the New York Times, Wall Street Journal and Financial Times, buyers from the United States, Japan and China have been very active.
Capital requirements for banks are forcing financial institutions such as Deutsche Bank (DB, quote), Santander (STD, quote) and Dexia (DXBGF, quote) to sell prime assets while countries like Portugal are having to privatize state-owned assets to meet the requirements of the International Monetary Fund bailout package.
Armed with stronger currencies, buyers from the United States, Japan and China are scooping up bargains. Private equity groups such as The Blackstone Group (BX, quote) and hedge funds are taking advantage of the discount prices as a result of stronger currencies.
China has been particularly active in the energy sector. Sinopec Shanghai Petroleum (SHI, quote) recently invested heavily into the energy sector of Portugal, both in utilities and oil companies
This will continue into 2012, if not beyond. Growth in the US, Japan and China will be down, leading businesses to look abroad to expand. European currencies will remain weak, offering discounts to greenback, yuan and yen buyers.
There will be a desperate need for funds by both the public and private sector in Europe as economic growth will be anemic at best, reducing earnings for companies and lowering tax revenues for governments.
As there is little interest in European bonds, asset sales will be needed to bring in capital from abroad to meet financing requirements.