Eurozone Crisis - II

Alchemist

Administrator
Staff member
#1
I am making a new thread for the Euro crisis.

For starters, Greek government has scheduled a referendum on July 5th. The public will decide if they want to accept the proposals made by Greece's creditors.

Banks and Athens Stock Exchange in Greece have been closed for a week.

Greece won't be getting any further financial aid for now.

The governing council of the ECB decided to freeze emergency liquidity assistance to the Greek banks, the lifeline that is keeping the national financial system functioning. The ELA was capped at last Friday’s level of €89bn. It meant that the banks could continue to function, but the draining of money as people flocked to the ATMs to retrieve their savings also meant they would run out of money that could not be replenished by the central bank.
Greece crisis deepens as banks close for a week after weekend that shook euro | World news | The Guardian

Greece will most probably default on its debt commitments this week.

As of now, things don't look good, but most analysts feel that the contagion is unlikely to spread. Other troubled economies in the Eurozone like Spain and Portugal have recovered a bit. Also, most of the Greece's debt is now with institutions and not with the banks. Moreover, ECB is likely to intervene aggressively if speculators try to selldown bonds of other Eurozone countries.

Asian markets are down sharply today and Indian markets are expected to correct too.
 

paran

Active member
#2
How come Indian market is bit isolated with the events happening around?

Shanghai index is getting beaten every day recently.
 

San Yad

Active member
#3
How come Indian market is bit isolated with the events happening around?

Shanghai index is getting beaten every day recently.
Sanghai and Heng Seng have there own IPO related issues which is a bubble in the China market now a days.

You might have noticed that Sanghai market hit 5178 recently and came down to 3800 within a week.

Hence you can see 5-8% up or down in that market until it settles down.

They are not down because of Greece problem.

We too are effected with Greece issues but could not figure out why our index is still up as compare to other markets.

Happy Investing!
 

Alchemist

Administrator
Staff member
#4
How come Indian market is bit isolated with the events happening around?
I am not sure about the short term movements of the market, but I feel in the medium and long term, Indian economy won't really be affected by worsening of the Eurozone crisis.

Firstly, I don't believe that things will get as bad as they did in 2008-2009. Governments all over the world now know that finally, if nothing works, they can print money to stop asset prices from falling. In case bond prices fall too much in Europe, we can expect the Troika to intervene again and stabilize yields.

Again I don't have any data to support it, but I feel that the type of foreign money that Indian stock market has got in last 1-2 years has a much smaller proportion of speculative money than what India had received in 2007-2008. A big part of the investments are here for the long-term and are unlikely to be withdrawn in case of temporary panics.

Thirdly, Eurozone's problems are unlikely to be resolved in next few days or weeks; maybe not even in next few months. That's a big positive for India as that would subdue demand and prices of natural resources, especially crude oil.

I still believe that the core concept of the Eurozone is flawed and is destined to fail. Sooner or later Greece (and maybe other weaker economies) will exit the Eurozone, recover and force other Eurozone members to rethink about the whole idea.
 
#5
Greece .will never have any impact to india

More than half the country will ask Greece ...where is it...?

Greece as a country is very small...smaller than most states in india. India has hardly any significant business with Greece.

Financial impact on india is only due to "rains"...and countries USA, Canada,China and Japan..

Greece ..hungama is only done by so called financial experts who cannot explain volatility in nifty...Greece,Oil prices and ISIS are the default punching bags.

Only impact I can see ..."More hindi movies will shoot in Greece since it will be very cheap.."
 

San Yad

Active member
#6
The main reason of keeping Greece in EU to stop other countries those are lined up e.g. Italy, Portugal, Costa Rico (US), Ireland etc. to be in default like Greece.

If the weaker countries exit euro zone then definitely there is significant depreciation of Euro. Hence USD will get stronger and stronger.

Of course emerging countries will have more business in Europe and more capacity to repay dues and buy things due to appreciating of emerging country currency.

I think our market should move up as foreign money will come in India or China market till the Greece drama goes on and whether default or not.

Most probable IMF will try hard to keep Greece in Euro zone. It would not exit easily. IMF will still support as huge money stuck there.

Do not forget they are still richer than India no matter default or not.

Once it's settle FII will run away and we will be back to where we are.

Happy Investing!
 
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#7
China is in center of the world and lot of Asian countries do, they impacted much last few years really. Greece do not produce anything probably for now, their manufacturing completely destroyed with help of EU and they just donor it with money. They may do that with few more, but world changes now.
 
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