Generali investment head says Dax has peaked, buy southern Europe Italian insurer Generali's chief investment officer has likened Germany's Dax to an "emerging market," saying it is time to sell stocks in Europe's biggest economy and buy into southern Europe. Nikhil Srinivasan, who oversees nearly €500bn in investments at Generali, Europe's third-largest insurer by premiums, is unequivocal when asked where he believes value can be found today. IN European Equities "The Dax has had an extremely good run and doesn't look as good as southern European or even French stocks," he says. Because of the number of companies in the index which rely on exports to Asia, "the Dax feels more like an emerging market [index]. I think it has peaked," he says. My trade would be sell Germany and buy southern Europe. The recent appointment of Mr Srinivasan, 45, as chief investment officer underlines the change in mood at Generali under its new chief executive Mario Greco. Generali has long been seen as a sleeping giant that made many poor investment decisions, not least because of its central role in the web of cross-shareholdings and overlapping directorships that make up Italy's salotto buono. During his first year in office, Mr Greco has made nearly €2bn of writedowns on Generali's holdings and is in the process of cutting its cross-shareholdings. Mr Greco's shake-up also brought in Mr Srinivasan, a Cambridge and Harvard-educated former chief of investment at Allianz. Underlying Mr Srinivasan's investment strategy is his experience in Asia as a Morgan Stanley banker during the crisis there 15 years ago. When Mr Srinivasan left Thailand in 1998 the benchmark index was at 250. It topped out this year at 1,600. That experience taught him that "you want to buy things that have absolutely been forgotten. The greater likelihood of making returns comes from looking at the forgotten things, rather than trying to pick bottoms in a crisis. If he looks out five years, Mr Srinivasan says he sees "a much better Europe." You will have improved policy making, you will have a deleveraged Europe, you will have a lot of investors having put more money into Europe gradually. It is on this basis that he sees southern Europe as an investment opportunity. If you are willing to ride it out in the next three to four years, you will make a substantial amount going long in these countries. These stock markets in Italy, Spain, Greece and Portugal are down 60 to 95 per cent from their highs. Will they recover their highs again? I think they will. Can they double or triple from here? On the US, Mr Srinivasan says he believes "we now need to work on the assumption that the Federal Reserve is serious not only about tapering but also in terms of moving up interest rates later on." But he is concerned that the European Central Bank should not follow the US in that regard. "We are at different stages economically so we should behave differently," he says. Instead, Mr Srinivasan believes the ECB needs to do two things. It has to ensure that real rates really are in negative territory in difficult economies around Europe. A positive real rate is not going to help anyone. The second thing they can hope to do is to help support the extension of credit where it needs to be and not rely on commercial banks. Just set up an SME bank for heaven's sake," he says. Among opportunities in the rest of the world, Mr Srinivasan says China does not hold as much appeal as other countries in Asia. I am much more interested in southeast Asia and Japan, although prices have gone up a lot. For a five-year trend, these countries are very interesting to us. Opportunistically, Latin America as well," he says. Three quarters of Generali's assets are divided equally between Italy, France and Germany. Mr Srinivasan says within three years the insurer could double its exposure to countries outside Europe which today represent just 3 per cent of its portfolio. Generali is also shifting out of underperforming assets and is seeking to raise €400m by selling stakes in private equity funds.