EUROZONE-GREECE/ANALYSTS Greek assets hold their ground as crisis enters "11th hour" amid analyst predictions

Record ID: 151794

  • Title: EUROZONE-GREECE/ANALYSTS Greek assets hold their ground as crisis enters "11th hour" amid analyst predictions
  • Date: 19th June 2015
  • Summary: LUXEMBOURG, LUXEMBOURG (JUNE 18, 2015) (REUTERS) GREEK FINANCE MINISTER YANIS VAROUFAKIS WALKING OUT, SMILING LONDON, ENGLAND, UNITED KINGDOM (JUNE 17, 2015) (REUTERS) (SOUNDBITE) (English) GLOBAL MARKET STRATEGIST FOR J.P. MORGAN ASSET MANAGEMENT, KERRY CRAIG, SAYING: "They do have a very large pension commitment, so the pension and the VAT have been the two outstanding i
  • Embargoed: 4th July 2015 13:00
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  • Topics: General
  • Reuters ID: LVABOC7EDN2A76IZUKW51T2J36T2
  • Aspect Ratio: 16:9
  • Story Text: Greek financial assets had held their ground on Friday (June 19), putting a bruising week behind them as investors pinned their hopes on an emergency meeting of eurozone leaders next week producing an agreement to unlock aid for Athens and avert looming default.
    The benchmark prices of stocks -- especially in the financial sector -- stabilised, while government and corporate borrowing costs dipped.
    The uneasy calm comes as the crisis enters perhaps its most critical phase -- the "11th hour", according to British Finance Minister George Osborne -- with Greece days away from potentially defaulting on debt repayments to the International Monetary Fund (IMF).
    Financial markets feared authorities may have to impose capital controls to prevent savers from emptying the banks as Greeks pulled more than one billion euros out of their banks in a single day, banking sources said on Friday.
    "They do have a very large pension commitment, so the pension and the VAT have been the two outstanding issues. There has been some sort of consolidation on pension recognising by the international lenders that you do need to look after this section of the population and perhaps what they have had in the past has been very generous but at the same time these people do need to be able to live, they do need to be able to fund their life styles to a certain extent," global market strategist for J.P. Morgan Asset Management, Kerry Craig, said.
    Default could lead to Greece eventually leaving the eurozone. More immediately, banks could be closed and capital controls imposed to prevent a flood of capital leaving the country.
    The European Central Bank (ECB) will hold a special conference call on Friday -- the second in three days -- to consider adding more emergency liquidity for Greek banks facing a quickening drain on their cash.
    ''If the worst does occur, and Greece does default, and Greece gets thrown out of the eurozone, then it finds itself in a terrible position where it needs an emergency currency. Short-term, you find a shortage of cash - people will take out cash out of the bank, so they'll take cash out of the country in any form they can," Seven Investment Management market analyst, Justin Urquhart-Stewart, told Reuters TV.
    Given that high degree of uncertainty, trading in Greek assets is even less active than normal.
    Greek savers have withdrawn more than three billion euros from banks this week, far more than the 1.1 billion euros additional funding granted by the ECB via its weekly Emergency Liquidity Assistance programme on Wednesday (June 17).
    "Is it threatening? I think, of course, it's also normal for Tsipras (Greek Prime Minister Alexis Tsipras) to look for alternatives, who could blame him? I think he's also trying to find new sources for economic growth. The Black Sea pipeline could be an option for Greece to create new economic growth. Whether this is politically and symbolically the right move, at the right time? I have my doubts," German Chief Economist for ING, Carsten Brzeski, said.
    Tsipras met with President Vladimir Putin on the second day of a visit to Russia on Friday - a trip that has raised eyebrows given the EU is at loggerheads with Moscow over the violence in eastern Ukraine.
    "Will Russia really get involved? I don't think so, look at the Russian economic situation. Russia is also in a recession, it has lots of problems on its own. I think yes, there might be an involvement when we talk about future investment projects, which could also benefit Greece. Will Russia be the helping hand in the current crisis, will Russia offer money so that Greece could recapitalize its banking system? I have huge doubts," Brzeski added.
    Russia's deputy prime minister said Moscow could consider giving financial aid to Greece, although Russia has previously played down such prospects.
    Meanwhile, ECB Executive Board member Benoit Coeure said on Thursday he didn't know if Greek banks would be able to open on Monday (June 22).
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