Risk appetite back after Greece deal


Investors globally are likely to go back to the riskier assets after the European Union leaders closed a deal with debt-riddled Greece on Monday to negotiate up to $95 billion of bailout to keep the near-bankrupt country from leaving the Eurozone.

April Lynn Tan, head of research at online brokerage COL Financial Group Inc., sees investors flocking back to the equities and bonds markets after the turmoil over a debt default by Greece has settled with the new deal in place.

“Investors will have greater comfort in investing in riskier assets like stocks, since the possibility of a contagion is no longer a problem,” Tan said in a text message.

The news about Greece came towards the end of the trading session on Monday, after all night talks were concluded in Brussels to grant Greece a shot at staying with the Eurozone.

European Council President Donald Tusk said on Twitter that it was agreed to extend the bailout deal to Greece.

“The Euro summit has unanimously reached an agreement. All ready to go for ESM program for Greece with serious reforms and financial support, he said, referring to the European Stability Program.

Tusk said the EU will now work with other institutions to move the negotiations swiftly.

Asked about the impact of the latest development in Greece on local equities, COL Financial’s Tan said, “It will still depend on fundamental factors, like corporate earnings and GDP [gross domestic product]growth.”

Summit Securities Inc. President Harry Liu expects buying to come about from both local and foreign investors in the next few days.

“The equities market is also oversold in the last few days. Even beforehand, there is the anticipation that the Greece bailout will be positive, that’s why China, Hong Kong and other international markets are up,” Liu said.

“People will still digest this agreement… We will see what the fundamental impact of this is on the economy,” he added.

On Monday, the Philippine Stock Exchange index (PSEi) rose by more than 100 points, following an onslaught of selling in favor of safe haven assets.

Liu said the latest optimism from the Greece bailout program may push the PSEi up to the 7,600 level from the 7,496.33 when it closed on Monday.

However, investors may stay cautious until the bailout plan is in place, said Eduardo Francisco, president of BDO Capital & Investment Corp.

“This should be positive, but investors may be guarded until the final bailout plan,” Francisco said in another text message.


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