July 2015 - Europe
Whatever the Greek parliament decide to ratify, Greece will remain in intensive care, but for the time being the euro project will carry on regardless. Either Greece accepts the draconian loan requirements or is forced to leave the eurozone altogether.
Either way the remaining 98% of the European economy is little affected. Because of concerns over Greece and the potential contagion effect, European equities have been lagging other western markets so a resolution - of sorts - over Greece could set the scene for a period of catch up. From the very start the other eurozone countries, along with the ECB and the IMF, were determined not to give in to Greek demands for debt forgiveness. They could have weathered that particular storm, had that been allowed to happen, but the same treatment for Portugal, Spain and Italy would have been far too expensive to contemplate. Greece has been sacrificed "pour encourager les autres”.
There are elections in Spain this year, but not until December, so the next edition of “Will they? Won’t they?” is five months off, which gives the markets time to regain some poise. The left wing party Podemos, who have had a rise in fortunes since Syriza in Greece started making headlines, will have taken note of the outcome in Greece as will the Spanish voters. The French presidential elections, where Marine le Pen is currently in the driving seat are not until 2017, but she like an increasing number are calling for a complete reappraisal of the euro project, which she believes is ultimately doomed to failure without total (totalitarian?) political union; not something on her agenda!
So for a tactical foray into Europe we have ten Elite rated funds: BlackRock Continental European, BlackRock Continental European Income, BlackRock European Dynamic, Henderson European Focus and European Special Opportunities, Jupiter European and European Special Situations and Threadneedle European Select. There are also two Elite rated smaller companies funds; Baring European Select and T. Rowe Price European Smaller Companies.
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Clive Hale, Director – July 2015
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