Should the Greek government and its international partners fail to reach an agreement in the emergency meetings scheduled for the coming days, a further escalation in the crisis would seem likely, argues UBS.
"This could well include changes to the ECB's provision of Emergency Liquidity Assistance (ELA) and capital controls, which would likely destabilise sentiment and put a heavy burden on the Greek economy, the banking system, and government finances – while not necessarily prompting the Syriza government to agree to Troika demands," UBS adds.
"Our base case scenario is still that a (last minute) compromise will be found, but the risk of a potential Grexit clearly seems to have increased," UBS argues.
"We argue that peripheral bank stocks primarily, peripheral bond markets, and (perhaps to a lesser extent) the EUR are likely to sell off in the near term, as the markets are not fully reflecting the probability of an escalation in relevant risks," UBS projects.
Copyright © 2015 eFXnews
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.