Even the most seasoned observer of the European crisis might have been a little surprised when Cyprus threatened to derail the regions's fragile peace. But it shows the eurozone's banana skins are multiple and well-hidden. This is the problem every potential European investor faces: its stockmarkets might be great value if it manages to haul itself out of its current problems, but that is a very big 'if'.
The history of the eurozone crisis has been well documented: it started with Greece, has gone on to infect Ireland, Portugal, Italy, Spain, and even - potentially - larger eurozone economies, such as France.
After backstage negotiations, and bailout after bailout, the eurozone finally achieved some measure of equilibrium last year, after European Central Bank governor Mario Draghi said he would do “whatever it took” to save it. This time, markets believed him.
European equity markets have suffered alongside the eurozone economies. Investors believed - logically - that bailing out entire countries might act as a drag on the economies of even the strongest countries in the region. As a result, companies would struggle to grow their profits.
The aftermath of the crisis therefore saw some horrible losses in the eurozone stockmarkets: The FTSE Eurofirst 300 - an index of the leading shares across Europe - dropped almost 60% from its peak in 2007 to its trough in 2009. In the fractured economies of Spain, Ireland and Italy, markets fell even further.
This meant for a long time European markets looked very cheap, but no one was prepared to take the risk of investing in the region. That all changed with Draghi's speech last year. It led to a leap in the prices of European shares, and investors who timed it correctly made a lot of money.
The same FTSE Eurofirst 300 index has risen 12.25% over one year. The average fund in the Europe ex UK sector has done even better, up 19.2%. It was the third best performing sector last year.
But what next?
The Cyprus situation shows Europe's problems have not gone away. Many of the major economies - Spain, Italy and potentially France, for example - are still in recession. The solution decided upon by eurozone policymakers appears to be closer fiscal union - moving to a closer tax regime and trying to turn the Greeks into solid, tax-paying citizens like the Germans - but at best this is a lengthy process, at worst it is unworkable.
Not out of the woods
Few experts believe the eurozone is out of the woods, even if the immediate threat of disintegration has passed.
Robert Quinn, chief European equity strategist at S&P Capital IQ, points out Spanish retail sales fell 7.9% year-on-year in February, the 32nd consecutive month of falls. House prices were 12.8% lower in the final quarter of 2012 than they were at the end of 2011. In the meantime, the Italian government is forecasting a drop of 1.3% in GDP in 2013.
Quinn points out even France and Germany are not immune from the weakness of their neighbours. Purchasing Managers Index (PMI) data for Germany - a measure of confidence in manufacturing - slipped in March. French consumer confidence is also deteriorating sharply.
However, investors need to bear two things in mind: the economy is not the stockmarket and Europe is not entirely the eurozone, but also includes countries such as Switzerland. Barry Norris, manager of the IM Argonaut European Alpha fund, points out global growth is more important to many companies in European stockmarkets than domestic growth.
Lots of companies have earnings in China or the US and there, growth prospects look much more promising. Nestlé, for example, has huge emerging markets exposure. Adidas is similarly global in its distribution.
As a result, many fund managers are prioritising global companies and rejecting domestic companies, particularly those exposed to the most troubled countries of Spain, Greece and Portugal.
A crisis in three countries
The eurozone crisis has impacted on countries in different ways. Here, we look at Europe from the perspective of the strongest and weakest countries - Germany and Greece - and a country that has sat outside the eurozone - Switzerland.
Greece has been the highest-profile casualty of the eurozone crisis. Its economy has now shrunk by almost a quarter since the start of the problems. In the last quarter of 2012, its economy shrank by 5.7%. This represented a slight slowdown in its decline, but it still saw a fall of 6.4% over the full year.
It is now officially classified as an emerging market by the rating agencies. However, some analysts have started to foresee a recovery towards the end of this year and its stockmarket (the Athens Composite index) is among the best performing over the past year, rising 20.64%.
The German economy provides the foundation for any hope of recovery across the eurozone.
It is the largest economy and most important trading partner for many countries in the region.The recent news that its economic output is at 'near stagnation' levels is therefore of significant concern, suggesting the country may not be able to throw off the weakness of its neighbours.The German Dax has risen 16% over the past year.
Switzerland is not a member of the eurozone and has therefore remained relatively immune from much of the eurozone crisis.The most recent statistics showed Swiss economic growth slowing in the fourth quarter, but still up 0.2% quarter on quarter and 1.4% on the year.
Many of Europe's highest-quality and most defensive companies are listed there, such as Nestlé or Roche. Its stockmarket (the SMI index) has been among the best performing of all European markets over the past 12 months, rising 26.43%.