Captain Euro
Donna Block: SHARE WORLD
Look, up in the sky! It’s a bird. It’s a banker in blue tights. No it’s Captain Euro, defender of truth, justice and a stable European exchange rate. Armed with a currency converter and calculator-like brain, the latest costumed cutie to hit the streets of Paris, London, Milan, Cologne and Barcelona will face down evil Euro-sceptics and nasty currency speculators while upholding the values of the European Union.
With less than two weeks to go before the riskiest experiment in the history of the European Union is launched – the introduction of a single currency – Europe’s leaders are looking for moral support wherever they can find it. In this case, it’s in the guise of a blue and white lycra-clad cartoon character and boy does he have his work cut out for him.
When 11 of the European Union’s 14 member countries wake up on January 4, everything from lettuce to leather knickers to stocks and bonds will be quoted in euros – a money that no one anywhere has ever dealt in before. Making matters even more confusing is that euros , that’s the coins and notes saying “euro” on them – will not be available until sometime in 2002. So even though a loaf of bread might have a euro price tag, to buy it in Germany means paying for it in Deutschmarks at an official euro-Deutschmark exchange rate.
If Europe ever needed a superhero, now’s the time. Just like Captain America, who was born to bolster American morale nearly 60 years ago as the United States was going to war with Japan and Germany, Captain Euro burst on to the scene to undertake the superhuman task of teaching kids and their parents about the new currency.
Launched a few months ago on a website, , Captain Euro and his buxom blonde sidekick called Europa are branching out and will start appearing in comic strips and making personal appearances throughout Europe next month. Already the website is registering more than 100 000 visits a day, and is quickly emerging as the place to go for anyone, young or old, who wants to learn about the new currency.
According to Captain Euro’s creator Nicholas de Santis, he came upon the idea after he had spent more than a year studying the European “identity” for the European Parliament as part of a project to help ease the introduction of new single currency.
“Children love Captain Euro,” said De Santis, a marketing executive, from London. “They can identify with him. They know where he lives and it’s in their neighbourhood.”
The feeling of admiration, however, is much less evident among adults in the London neighbourhood of Westminster. Opposition to the European Union, and the introduction of the euro in particular, is rife in the Britain. One British MP even went so far as to say Captain Euro was “dangerous and should be killed off”. Some London-based human rights activists have called Captain Euro sinister Euro- propaganda and have even labeled him racist because of what they says is his neo- Nazi, Hitler Youth-style uniform.
Is it any wonder that the villains Captain Euro faces in his daily battles against the forces of Euro small- mindedness wear bowler hats, pinstripe suits and carry umbrellas?
But Captain Euro’s first real test will come on January 1 1999, when the whole shebang kicks off. On his website, which includes a special euro currency converter, he will have to use his super calculator mind to help euroland investors figure out what is going on. Confusion will be the order of the day and it might prove to be the biggest battle of the character’s short life. But if all goes well, the creation of a unified currency zone almost as big at the US’s could propel Europe into an economic powerhouse and turn Captain Euro into, well, a Superman.
Most of us will be partying and making long lists of resolutions on New Year’s Eve. But, pity the thousands of bank and investment house staff who will be working round the clock that weekend, attempting to adjust systems and procedures to the new currency. Experts say this is the period of the greatest risk, when catastrophes are the most likely to happen.
Once the banks open for business on January 4, the phones at investment houses will be ringing off the hook, and explaining the changes to investors big and small will be a monumental task.
So what will happen once the euro is launched? That is the question of the year. The truth is, nobody really knows. Weak European financial markets could escalate on the upside, and a new reserve currency should take a place along side the dollar in many investor portfolios.
The theory is that the euro will eliminate one of the risks built-in to investing in foreign companies’ shares: currency fluctuation. From New Years Day, shares in those 11 countries that have joined the euro club will be quoted in the new currency. So investors who pay in euros for shares can be confident that, if the price goes up or down, it will be because the company has done well or badly rather than because of movements in that country’s currency.
At least, that is how it will work for investors within the euro-zone. But those in countries such as Britain and Sweden that have decided not to join the club – not to mention Switzerland, which has stayed out of the EU completely – and investors in the US and other countries, will still have to deal with exchange rate risk. And, given sterling’s unrelenting rise against the major currencies over the past two years, that is a big risk.
But that has not deterred investors in the United Kingdom or the US from thinking in a more Continental way. Most are betting on Britain joining the club in the second go-around, and savvy investors are no longer looking at investments on a country-by-country basis but are analysing companies on an industry or sector basis. Banks have already started to adapt.
According to one European equity strategist, with the launch of the euro comes the good news and the bad news. The good news is that there will be a greater choice of stocks available to fund managers and they should have more balanced portfolios. Investors will seek out attractive foreign companies and hopefully this will mean higher returns for the same amount of risk.
The bad news is that while some companies will get it right and expand, others won’t be able to handle the pressure of being a European company and will lose their markets.
Investors will have to be on their toes. The difference between a poor share performer and a good one will be magnified and this could make for more volatile profit performance among different companies.
Euroland has a lot to offer investors.