A Grexit is coming, money managers say.
After the Greeks rejected the E.U.’s proposal for more austerity in a referendum Sunday, asset managers are more convinced that a Greek exit is imminent, reports Pensions & Investments. But the markets weren’t as jolted by the referendum as much as some may expect, or as much as it was following the call for a referendum at the end of June. Writes P&I:
“That tells you that the expectation in financial markets and potential impact on eurozone recovery, growth and contagion is very limited. And that is right and what it should be,” says Wouter Sturkenboom, senior investment strategist at Russell Investments.
Money managers will be waiting for more announcements from Greece this week, including an emergency euro summit Tuesday. And preparation involves being ready for any outcome, says Eric Chaney, chief economist at AXA Investment Managers. RBC Global Asset Management chief economist Eric Lascelles has bumped the chance of a Grexit up to 60%, from his 25% bet in May. Richard Benson, co-head of portfolio investments at Millennium Global Investments, also put the chance of a Grexit at 60%.
Sturkenboom says chances of an exit could vary between 40% and 70%, depending on how demanding Greece remains in discussions Tuesday.
Photo: dierk schaefer via Flickr.