Bill Witherell of Cumberland Advisors says Portugal's debt is a good buy now.
"Going forward, the economic forecast for Portugal is for a return to positive growth this year, in contrast to the further declines projected for Greece, Spain, and Ireland," Witherell says.
Portugal did not suffer from a housing bubble like Spain and Ireland, Witherell notes.
“Its banking system is sound,” he says.
“Productivity growth is above the EU average, which should improve the economy's competitiveness and help Portuguese firms take advantage of the weaker euro."
Moreover, Portugal’s government has been carrying out a number of structural reforms and has a responsible program in its 2010 budget for reversing the recent fiscal deterioration.
"Our conclusions for investment strategy are that Portuguese bonds, with real yields above 4 percent, look attractive, whereas Portugal's equities probably will not outperform the euro zone average this year."
Investors should differentiate between Portugal and Greece, Witherell says.
Portugal’s easier funding schedule has gross financing requirements in 2010 of only a third of those faced by Greece.
Given that Portugal’s debt-to-GDP ratio is substantially less than that of Greece, this longer-maturity schedule means that Portugal has more time to resolve its fiscal problems.
"The disappointing Eurozone growth data for fourth quarter 2009 are a sobering reminder that recovery from financial-crisis-led recessions tends to be slow and protracted, and might not prove very supportive in calming markets’ fears about the region," ING Bank economist Martin van Vliet told Forex TV.
According to the economist, the anemic pace of fourth quarter growth makes crystal clear that the euro zone economy cannot yet stand on its own feet.
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