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26 Jan 2015
Risk contagion from Greece to be moderate for EM in eurozone – DB
FXStreet (Barcelona) - According to Deutsche Bank, the risk of contagion form Greece would be moderate emerging markets in EU and concentrated mainly in 3-4 countries in south-eastern Europe, while it would be significantly lesser in the rest of the euro area.
Key Quotes
“[..] the direct spillovers from Greece to emerging markets in the region would be moderate and concentrated mainly in 3-4 countries in south-eastern Europe, others could nevertheless be impacted if problems in Greece triggered renewed pressure on the euro area or broader global risk aversion.”
“We think the risks of contagion from Greece to the rest of the euro area are now much lower than at the height of the European debt crisis. The private sector, for example, now owns less than 20% of Greek debt; sovereign bond markets elsewhere in peripheral Europe are less sensitive to changes in foreign investor sentiment as foreign ownership has declined; and the European banking system is now more resilient following the capital raising efforts of the last few years.”
“Nevertheless, recovery remains weak, structural adjustment is incomplete, and political risks are rising, such that a further bout of stress remains possible.”
Key Quotes
“[..] the direct spillovers from Greece to emerging markets in the region would be moderate and concentrated mainly in 3-4 countries in south-eastern Europe, others could nevertheless be impacted if problems in Greece triggered renewed pressure on the euro area or broader global risk aversion.”
“We think the risks of contagion from Greece to the rest of the euro area are now much lower than at the height of the European debt crisis. The private sector, for example, now owns less than 20% of Greek debt; sovereign bond markets elsewhere in peripheral Europe are less sensitive to changes in foreign investor sentiment as foreign ownership has declined; and the European banking system is now more resilient following the capital raising efforts of the last few years.”
“Nevertheless, recovery remains weak, structural adjustment is incomplete, and political risks are rising, such that a further bout of stress remains possible.”