01-07-2015
From the Chief Investment Officer’s Desk: Greece Fallout - Significant Events Unfolding Soon
The Greek government announced a referendum to be held on 5 July on whether to say “Yes” or “No” to the creditors’ proposal for bailout aid. The unexpected turn of events over the weekend is seen pushing Greece towards default as early as this evening (Tuesday, 30 June 2015) and an exit from the Eurozone.
The uncertainty over Greece will overhang market sentiment and the US nonfarm payroll report due for release on Thursday, 2 July could add further to market jittery. The direct beneficiaries for such risk aversion environment will be US dollar and Japanese yen. In Asia, negative sentiment will hurt currencies such as MYR and IDR which are already being weighed down by their own domestic issues, as well as more liquid currencies such as SGD. USD/MYR touched a high of 3.80 last Friday with Bank Negara reportedly in the market. However, we do not expect significant market distress in Asia at this point, unless the Greek drama turns into a global financial market contagion.