Running to stand still
Gavyn Davies (pictured), chairman of Fulcrum Asset Management, chaired a panel discussion on how Greek elections and eurozone political upheavals are shaping the markets. Part of the discussion was to establish the extent of bullish/bearish sentiment of Gaim International 2012’s audience. Karlheinz Muhr, CEO of QFS Asset Management and Mark Poole, CIO, BlueBay Asset Management, were the other two panellists.
Noting that there was an important meeting on 22nd June between Merkel and Hollande, Poole believed it would give some indication as to how much ground Germany is likely to give and said the Greek situation was an inflection point. He said he didn’t believe the markets would continue to fund Spain anymore. “The whole debate has moved towards whether Germany will do something. We’re expecting to see some sort of road map coming out on the 28th June going forward. It’s very difficult at this point to see Merkel having the necessary domestic constituency to make the changes that markets will be expecting on the 28th,” said Poole.
On Spain, Muhr said the solution was merely patching things up and was continuing to erode the euro.
Davies then asked the audience a series of questions. When asked when Greece would exit the euro, 40 per cent responded “later or never”. Davies then made things interesting by asking “When will Spain exit the euro”? A more bullish response resulted, with 82 per cent answering “later or never”. As for how German 10-year bunds will be impacted over the next 12 months, 50 per cent of the audience voted that it would trade within the 1.5 to 2.5 per cent range.
“I think this will be the more likely trading range as inflationary pressures take hold over the next 12 months,” said Muhr.
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