To what extent does the situation in Greece affect investment options in other European markets? And do your clients really have to steer away from Europe altogether?
By Tulika Marathe
Last week brought a new ray of hope for Greece, when other Eurozone nations stepped up to offer another (expensive) helping hand. It was just in time too, as the nation’s banks came dangerously closely to running out of cash.
But how infectious is the Greek crisis for other European markets?
“We’ve all been hit at least indirectly by the Greek trauma,” said Clinton Orr, portfolio manager at the Bonten Wealth Management Group. “Other European markets took a hit too – values in the UK and Germany have dropped slightly as a result of the debacle in Greece.”
Greece’s current debt is upwards of $380 billion. The nation’s only hope now is to receive its third bailout from Germany and other creditors, and that’s contingent upon a number of reforms Tsipras’ government has yet to approve. The full effects of Greece’s debt are still an unknown quantity.
A lot depends on whether or not Tsipras’ government approves the reforms to meet the creditors’ demands. For the moment, ‘Grexit’ has been held off, thanks to Belgium and Germany’s last-minute rescue and Greece’s (current) readiness to discuss the much-needed changes in their financial operations.
So what’s the solution? If you have securities in Europe, said Orr, it’s time to sell now. If not, don’t invest too much money in Europe for the moment. Some safer places in Europe to look at for investing in securities are Germany and France and other more stable northern European countries.
“We don’t look at individual companies in these countries – it’s too risky,” said Orr. “But I would suggest ETFs. You don’t have to worry about individual security risks.”
Last week brought a new ray of hope for Greece, when other Eurozone nations stepped up to offer another (expensive) helping hand. It was just in time too, as the nation’s banks came dangerously closely to running out of cash.
But how infectious is the Greek crisis for other European markets?
“We’ve all been hit at least indirectly by the Greek trauma,” said Clinton Orr, portfolio manager at the Bonten Wealth Management Group. “Other European markets took a hit too – values in the UK and Germany have dropped slightly as a result of the debacle in Greece.”
Greece’s current debt is upwards of $380 billion. The nation’s only hope now is to receive its third bailout from Germany and other creditors, and that’s contingent upon a number of reforms Tsipras’ government has yet to approve. The full effects of Greece’s debt are still an unknown quantity.
A lot depends on whether or not Tsipras’ government approves the reforms to meet the creditors’ demands. For the moment, ‘Grexit’ has been held off, thanks to Belgium and Germany’s last-minute rescue and Greece’s (current) readiness to discuss the much-needed changes in their financial operations.
So what’s the solution? If you have securities in Europe, said Orr, it’s time to sell now. If not, don’t invest too much money in Europe for the moment. Some safer places in Europe to look at for investing in securities are Germany and France and other more stable northern European countries.
“We don’t look at individual companies in these countries – it’s too risky,” said Orr. “But I would suggest ETFs. You don’t have to worry about individual security risks.”
