Fidelity's Dominic Rossi on Greek bailout deal
Categories: Investments
Dominic Rossi, Global CIO Equities at Fidelity Worldwide Investment, comments: "After months of wrangling about the second bailout, and on the day of its announcement, we now discover we may need a third bailout. The resolution to the Greek problem still eludes European finance ministers despite the amount of public money being made available to Greece. My view remains that at some stage Greece will voluntarily default and leave the Euro.
"A Greek default has been priced into equity markets but what is far less clear is the implications for other nations, particularly Portugal, Spain and Italy. Whilst we appreciate progress has been made, particularly in Italy, in pursuing policies that ultimately worked in emerging markets 15 years ago, this remains a multi year workout during which they will remain vulnerable to external shocks such as a Greek default.
"Markets have been buoyed by cash injections from the ECB’s LTRO facility but the risks to the rally are rising oil prices and renewed frustration over the incapacity of European finance ministers to deal with the issues in Europe. If the rally continues, it will be driven by further positive news from the US and China rather than developments from within Europe."
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