Weekly Newsletter

Weekly Newsletter

Despite Greece is still dominating political and economic headlines nothing much has changed versus our last newsletter two weeks ago. Greece still wants to keep the Euro. The Troika of EU, ECB and IMF wants to keep Greece as a partner. Creditors do not want to write off their billions of money they lend to Greece. Rating agencies are happy to assist creditors by not declaring a default despite a missing debt payment to the IMF recently.

And what role is Greek Prime Minister Tsipras playing in all this? Right, after five months of negotiations, turmoil, U-turns and mutual recriminations he has not changed either. Last weekend the Greek government has decided that it is unable to take responsibility for a clear “yes” or “no” to the results of negotiations on its own. Greek voters are almost evenly split in regard to the referendum that European leaders said could plunge the country into economic darkness.

Greek people have stayed quite calm so far. However they have drained their bank deposits dramatically – see also our chart of the day! To stop this the ECB has introduced capital controls. Greek’s withdrawals have been limited to 60 euros a day.

Erwin Lasshofer and his INNOVATIS team still expect an agreement between Greece and its creditors. There is no easy solution. However we have already seen some encouraging sings for finding a compromise. Tsipras explained his surprising moves as a means of improving Greece’s bargaining power. And chancellor Merkel is said to have already tried a last minute deal with major concessions. ÒIf the euro fails, Europe fails,Ó German Chancellor Angela Merkel often says.

Currently this uncertainty weighs on markets. We expect a quick recovery after an agreement. In the unlikely event of a “Grexit” we expect European equity markets to drop 10-20% in the short term. In the long term we are positive and expect increasing markets. Investor should look out for opportunities now. Risk averse investors should take advantage of current volatility buying all-weahter products such as Core Express Notes. Investors willing and capable to bear some risk should consider selected products that quickly benefit from a recovery such as Lock-In Notes.



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