U.S. based multinational banking and financial services corporation Citigroup is examining what a SYRIZA government might mean for Greek equities, taking in account the upcoming presidential election in Greece and the risk of early general elections which might bring the leftist opposition party to power.
According to the 15-page analysis entitled “Road Bump or Write-Off – What Might a SYRIZA Government Mean for Greek Equities,” the current Greek coalition government stands minimum chances of securing 180 votes necessary for electing a new President, therefore the country will need to turn to the ballot boxes sooner than programed. Latest polls show opposition party SYRIZA ahead of governing New Democracy by 6.5%, but what does that mean for Greek equities?
Citigroup believes that a SYRIZA government will benefit the equities of OTE (Hellenic Telecommunications Organization S.A.), PPC (Public Power Corporation S.A.) and Aegean Airlines. That is because these three Greek economy “giants” are relatively isolated due to their size and will remain unaffected by any political or economic change. At the same time, the National Bank of Greece equities are projected as strong enough despite any possible political remapping in Athens.
As mentioned in previous analysis, dated October 3, a write-off of a large chunk of Greece’s public debt is necessary for the long-waited restoration of its fiscal sustainability and that, according to SYRIZA’s governmental agenda, is something that will be done. On the other hand, a possible relaxation of the current retrenchment economic policy might lead Greece back to 2011, at the very beginning of the economic crisis, and foreign investors to withdraw. Taking in account both these scenarios, Citigroup foresees that it is more possible for investors to forgive relaxation of retrenchment if it comes with wider economic growth, which is so far missing. In the near future, Citigroup awaits equities to be unstable because investors will reframe their needs due to political changes.