Paul O’Connor, co-head of Henderson’s multi-asset team agrees, explaining: “At this stage, we see the Greek referendum as more of a one-off shock to European markets than a major systemic crisis. Greece is small – less than 2% of eurozone GDP – and direct private sector exposure to Greece is modest. Furthermore, the ECB is much better equipped to stem contagion than it was in 2011-12 and is likely to react forcefully if market turbulence leads to a warranted tightening of monetary conditions.”
Shifting allocations
Caspar Rock, Architas CIO, said the firm has prepared for the worst, but continues to hope for the best. But, he agrees that the markets have definitely raised the probability of a Greek exit.
While the firm still likes Europe, at its June strategic asset allocation meeting it did reduce its overweight somewhat and move that money to the US.
Coutts Investments said, while it still expects some kind of agreement, the rapidly deteriorating situation makes it more difficult as time runs out. But, it added: “We remain positive on risk assets and see any major sell-offs as buying opportunities, given the small size of the Greek economy and the European firewall that has been built to stop contagion.”
Only time will tell exactly how this will all play out, but time does seem to be running out and, in the meanwhile it feels very much like there is a lot of allocation fiddling happening while Greece smoulders.
