DENMARK – PFA, one of Denmark's largest pension funds, is buying US equities and selling traditional bonds, amid worries about developments in the euro-zone.

The DKK370bn (€50bn) commercial pension fund said the events surrounding the Cyprus aid package were a clear reminder that political risks would also hit the wider economy and the financial markets in 2013.

This would happen, even though the global economy today was now said to be more resilient to adverse shocks from the euro-zone, particularly because of underlying economic strength in the US, PFA said.

Events in Cyprus also showed that the ECB's government-bond purchasing – the Outright Monetary Transactions programme – was no miracle cure, PFA said.

"It reduces but does not eliminate the risk of extreme scenarios such as a euro exit," the pension fund said.

By contrast, there had been growth in the US economy and PFA had now begun to believe in a permanent recovery in the US, it said.

"Since autumn 2012, PFA has gradually increased its holdings of US equities in particular, at the expense of traditional bonds," the pension fund added.

Factors intensifying worries about the macroeconomic situation in the euro zone included signs of German economic weakness, the failed formation of a government in Italy, pressure on the bank sector in Spain and Italy as well as the unusual economic aid solution in Cyprus, PFA said.

Henrik Henriksen, chief strategist at the institution noted: "If the fear for bank deposits starts to spread to other peripheral countries, that could very quickly lead to capital flight and bank crises."

He pointed out that in order to get the €10bn aid package, Cyprus had been forced to seize large proportions of wealthy bank customers' deposits.

However, Cyprus could also be a wake-up call prompting new efforts to achieve a necessary reform of the currency union, the pension fund suggested.

"We have said before that a banking union is a necessary condition for a stable currency union," Henriksen said.

"Such a banking union would need wind-up mechanisms for failed financial institutions, which will be necessary sooner or later, because parts of the banking sector in the euro-zone periphery still need to be cleaned up," he said.

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