Investors Will Run For Safe Havens

 

 

We don’t have to tell you that the tension between Greece and its sponsors is getting worse each passing day. Investment experts from Fidelity, a wealth management company, are looking at the referendum of this coming Sunday. They expect that a 'no' from Greece is inevitable and prepared for the potential consequences on the financial markets.

Paras Anand, head of European stocks at Fidelity, wonders what the Greek prime minister Alexis Tsipras is trying to achieve by bankrupting the country and putting the European bail out plan through a referendum. Anand finds that turning to the people might not be the best move, politically, and that it is quite risky.

Safe Havens

It is becoming increasingly clear how frustrated the negotiation partners of the Greeks have become throughout the whole process. They look at plan B as a good alternative. Meanwhile the whole situation is escalating and threatening the safety and well-being of the population, according to Anand.

Dierk Brandenburg, bond analyst at Fidelity, stated that, although a Grexit would not be automatically triggered by the referendum, bankruptcy is almost inevitable considering everything else that will follow. The eurozone will aim to protect itself by raising the liquidity of banks, if this proves to be necessary or by making changes in the QE policy.

Investors Choose Safe Havens

Colleague Eurgene Philatilis, multi-asset portfolio manager, added that if the Greeks vote 'no', the government will get carte blanche. She also feels that this potential 'no' has not been priced into the markets at all. Now that people realize that this is a real scenario, the possibility exists that investors will run for safe havens like government bonds; the markets will probably get oversold. A rate hike also seems unlikely for September with the strong dollar on top of everything that is happening in Greece.