The events in Greece have undoubtedly made headlines which have resulted in markets starting this week with the FTSE 100 index falling nearly 3%. Whilst we are of course mindful of the current situation and will continue to monitor the developments, we thought this a good opportunity to provide some reassurance.
Last week, talks between Greece and the Eurozone countries over bailout terms ended without an agreement. Friday evening saw the Greek government calling a referendum on its international creditors terms for a new bailout, which will take place this Sunday (5th July 2015). Prime Minister, Alexis Tsipras has urged voters to reject the proposal, which demanded reforms in return for loans, however it is believed most voters will want to stay in the Euro.
Capital controls have commenced which have been imposed by the Greek Government, meaning the amount of money people can withdraw from banks will be restricted. The move follows the European Central Banks decision not to extend emergency funding.
Despite worries about the deepening crisis in Greece, market watchers say that European markets are equipped to handle short-term volatility.Please see the comments below from some investment managers;
Brooks Macdonald Asset Management :
Whilst the Greek problems raise fundamental questions over the validity of the single currency, that in our view is a question for another year. We expect a bailout agreement of some sort and Greece to remain as part of the Euro, at this time. From an investment point of view the situation seems to be creating an indiscriminate selloff across all sectors. As such, we would view any significant falls in equities from here as a buying opportunity to gain access to world class companies, but at a discount.
Cazenove Capital Management
While the current debacle has dented confidence in financial markets, we do not believe that a Greek exit from the euro would cause lasting damage. Greece is a very small part of the European economy (1.8% of Eurozone GDP), and the monetary and financial systems of the Eurozone. Peripheral economies are now far less fragile than they were in the immediate aftermath of the recession. Bond yields in Greece and those in the rest of Eurozone have decoupled and deposit outflow in Greece has not triggered deposit outflow elsewhere.
`Whatever happens we are in for a period of uncertainty and volatility in the coming days. We need to remember that the European banks are less exposed now than they would have been a couple of years ago. Very little Greek debt is in private hands. The global economy is in much better health than it was in 2011 and should be able to handle this without major impact.Â
If you are invested for the long-term, across a diversified portfolio of assets and geographical regions any short-term volatility could provide good opportunities for investment managers. With a long term strategy we do not see Greece as a lasting issue.
Robertson Baxter is a full service whole of market Independent Financial Advice firm. We offer a Family Office approach to clients of high and ultra high net worth together with Trustees and Charities. Our holistic advice covers all areas of Pension, Investment, Protection and Estate Planning, serving clients across Yorkshire.