Mar­ket fears ease after Tsipras calms on Grexit

Financial Mirror (Cyprus) - - FRONT PAGE -

As Greece braces for na­tional elec­tions in twelve days time, the Greek fi­nan­cial mar­kets seem to have stead­ied on Mon­day in a sign that in­vestors are now less con­cerned that the re­sult could lead to the coun­try drop­ping out of the euro.

In late trad­ing in Athens, the yield on the Greek 10-year bond was down 0.66 points at 9.32% and the main stock in­dex was up 4.3%.

De­spite the im­prove­ments, bonds and shares are still far­ing worse than when the elec­tion was called at the end of 2014, ac­cord­ing to the As­so­ci­ated Press.

Opin­ion polls in­di­cate the Jan­uary 25 elec­tion will see the anti-bailout Syriza come first ahead of con­ser­va­tive Prime Min­is­ter An­to­nis Sa­ma­ras’ New Democ­racy and his frag­ile coali­tion. How­ever, eas­ing mar­ket nerves some­what, Syriza leader Alexis Tsipras said in a week­end in­ter­view in the weekly Real­news that a gov­ern­ment headed by his party would hon­our up­com­ing debt obli­ga­tions in March, calm­ing fears that his left-wing party could uni­lat­er­ally re­nege on the coun­try’s bailout loans.

Syriza wants more than half of the bailout debt of 240 bln euros be can­celled, ar­gu­ing that a sus­tained re­cov­ery after six years of re­ces­sion is im­pos­si­ble oth­er­wise.

Syriza would prob­a­bly need to form a coali­tion to gov­ern, but its chances of an out­right win are in­creas­ing as vot­ers fo­cus on the two main par­ties and ig­nore al­ter­na­tives.

“There are in­di­ca­tions that the first two par­ties are pulling ahead ... leav­ing the small ones be­hind,” Alexis Rout­zou­nis of the Kapa Re­search polling company told the As­so­ci­ated Press.

The po­lar­is­ing elec­torate, he ar­gued, re­flected a clear choice fac­ing vot­ers be­tween tak­ing a con­sen­sual or con­fronta­tional line with bailout lenders.

“What counts now, is whether the 12-15% un­de­cided vot­ers will split with the mind­set of a two-party race, or scat­ter to the smaller par­ties they pre­vi­ously sup­ported,” Rout­zou­nis said.

Mean­while, Na­tional Bank of Greece (NBG) ADRs closed up 6.37% to $1.67 in New York on Mon­day after Tsipras said that Greece would re­main in the Eu­ro­zone.

“It’s clear from any point of view that the sub­ject of Greece leav­ing the euro sim­ply does not ex­ist,” he told Real­news.

A re­port in a Ger­man mag­a­zine last week had claimed that Ger­many would let Greece leave the Eu­ro­zone, with Chan­cel­lor An­gela Merkel and Fi­nance Min­is­ter Wolf­gang Schaeu­ble adding that Greece’s de­par­ture, or a ‘Grexit’, from the eco­nomic and mon­e­tary union would be “man­age­able,” ac­cord­ing to Der Spiegel.

The re­port also claimed the Ger­man gov­ern­ment con­sid­ers Greece’s exit “in­evitable” if Tsipras comes to power and if the coun­try does not ser­vice its debts.

Prime Min­is­ter Sa­ma­ras said in a speech two weeks ago that a vic­tory for Tsipras and Syriza would cause de­fault and Greece’s exit from the Eu­ro­zone, ac­cord­ing to Bloomberg.

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