Greece after the "No" vote...and what is going on in China?
Greece after the "No" vote...and what is going on with China? July 6, 2015
Well Greece has stunned the world, yet again, with either their amazing bravery or their astonishing foolishness!
From an Australian investors point of view, we plan to sit tight during the volatility and wait for the storm to pass. What happened last week is likely to occur again this week. Last Monday, the Australian (and world) share markets fell - by Thursday most of those losses had been regained, and on Friday they got the jitters and sold again but not as substantially as Monday. Today, the Australian share market ended 79 points down (recovering half the losses of early morning trade by the afternoon). This reinforces our view to just sit tight (whilst looking for the opportunities)
For a fuller coverage of the Greek situation, click here to read an article from Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital. Oliver’s article is easy to understand and is a good evaluation of the current Greek drama (a tragedy for the Greek people).
The reasons Oliver does not believe the events in Greece will have a major long term effect on World markets are:
Its direct impact on the Eurozone, the global economy, and Australia, is virtually non-existent,
The Greek crisis is now nearly six years old and private exposure to Greek debt is now very low, and
Other vulnerable European countries are now in much better shape that when Greece triggered the European sovereign debt crisis over the 2010-12 period,
Defence mechanisms to support troubled Eurozone countries are now much stronger than what they were in 2010-12, and finally
The economic and financial chaos that Greece has descended into will likely turn voters off supporting anti-austerity parties promising easy salvation in other countries.
More worrying than the Greek situation, is what’s going on in the China share market. The Chinese share market delivered excellent double digit results over the past year, but over the last month or so we have seen a sell off and today the Chinese government is coming out in support of the market (which is good but worrying at the same time).
From a global perspective, no change is being recommended to our international assets (given their emphasis on owning global shares not Chinese shares as such). If any more news comes to light that we believe will necesitate a change to your existing portfolio, we will be in contact.
In the broader context, we believe the next 12 months will be good for share markets and we shall be on the lookout for opportunities, because they will arise.
Please do not hesitate to contact me if you would like to discuss these events in greater detail.