Positivity towards Germany amidst concerns for Continental Europe Brexit has raised awareness of the related threat of wider EU disbandment, although this has had a relatively small effect on Continental European allocations on the whole (from 12.8% of AUM in 2016 to 11.2% in 2017). Instead, it has caused sovereigns to focus on the more stable countries within the EU. Sovereign investments in Germany have increased based on its economic strength (with its attractiveness increasing year-on-year in figure 10), and many respondents attribute this to Germany's industrial sector (an estimated 30.3% of GDP relative to 19.2% in the UK, 19.4% in France and 23.9% in Italy). However, investment sovereigns identified German financial markets as an area of potential growth post-Brexit, offering a stable platform for investments across Europe. Furthermore, liability sovereigns explained that if the eurozone were to disband, Germany's role as the financial hub of Europe would have significant upside for the German currency, with many funds building currency hedging strategies to take this into account. Fig 10. Attractiveness of continental European markets M2015 to sovereign investors M@ 2016 @ 2017 Germany France Italy Fe 7.0 6.6 16.2 BS) 5.6 ; ; Germany is seen Sample is based on sovereign investors and excludes central banks. as astable platform Rating on ascale from 1 to 10 where 10 is the most attractive. Rating scored as of Q1 of the given years. for investments Sample: 2015=26, 2016=44, 2017=58. across Europe. 18 HOUSE_OVERSIGHT_026698