Ongoing uncertainty in Greece upholds market volatility
In the last few hours Greek Prime Minister, Alexis Tspiras, asked Eurozone authorities for a new third bailout fund, as the clock ticks towards the €1.55 billion debt repayment to the IMF tonight (Tuesday).
So has the PM actually yielded at the eleventh hour? Looking back over recent weeks, it’s become gradually more evident to my mind that he actually wanted to leave the Euro, having rejected the last-minute deal by Junker, the head of the European Commission, and others, and by actively campaigning on the ‘vote no’ trail in the last day or so.
Latest news states that Greece has submitted a new request to the Eurozone’s € 500 billion rescue fund in order to cover debt obligations for two years, as well as an extension to the existing bailout until the new one is agreed. Tspiras has also requested a restructure to the country’s European Financial Stability Facility debt.
Eurozone finance ministers are therefore convening tonight in Brussels to discuss the proposal, and it is reported that Tspiras may also be in attendance.
The clear obstacles however with the Greek PM’s proposal include the fact that it has arrived very late on in the negotiations; Greece is requesting a third bailout without having finished the second; the required loan does not suggest that the country is signing up to primary surplus targets; and in no way confirms acceptance of the conditions set out by the creditors for an extension to the current bailout.
But has the Prime Minister really changed his position though? Have reports of bank closures, concern over non-payment of pensions, welfare benefits and public sector wages in euros made him alter his mindset?
We’ll very soon find out.
Nevertheless, whatever the outcome, the whole Greek saga has profoundly affected investor confidence, and will inevitably influence financial markets long-term, which will lead to increased volatility. As you might expect, investors will be keeping an eye on events in Greece and the fallout beyond in order to see how they can position their portfolios to avoid risks and to take up the opportunities that will present themselves as we enter a fresh wave of market uncertainty triggered by the Grexit endgame.