UK investors should not ignore Greece, warns top advice firm
Nigel Green, founder and chief executive of deVere Group, said the Greek government seems determined to leave the euro and investors should not ignore the noise coming from Athens.
The comments come amid reports that the European Commission is braced for a “state of emergency” in Greece, ahead of Thursday’s deadline meeting of euro-area ministers.
“This Greek saga is about to reach its climax,” said Green.
“Syriza’s increasingly defiant tone strongly suggests that Greece’s government is quite determined to leave the euro. It seems Athens now firmly believes that it is better not to blink in its negotiations with the IMF and the eurozone institutions, and to be thrown out of the euro as a result, than it is to stay in the eurozone and have to reform the economy.”
He added: “It would appear that prime minister Alexis Tspiras’ desire for power outweighs his desire for his country to remain in the eurozone. He will be aware that if he bends to the austerity demands he will lose credibility, the hard-line left of his party will breakaway, and it is likely he would lose power.”
“All this is of fundamental importance as it is driving Greece further and further towards the Eurozone exit door.”
Although individuals are unlikely to have high exposure to Greek equities or bonds, a ‘Grexit’ (Greek exit) is likely to send shock waves throughout global capital markets.
“Once the principle that a country can leave the euro is established, investors will demand a risk premium on other highly indebted eurozone countries,” said Green.
“This volatility will impact on many investors’ returns. With this in mind, investors might wish to review their portfolios after Thursday’s crucial meeting between Greece and the Eurogroup of finance ministers.”