Delphi’s Espen Furnes sees higher risk of Greece exiting eurozone

Espen Furnes, manager of the Norway based Delphi Europa fund, has commented on the outlook for European assets in the wake of the recent French and Greek elections – including the hightened risk of Greece exiting the eurozone.

Will Hollande tear up the agreement between Sarkozy and Merkel?

We do not believe that Hollande is going to break the agreement, he will be perceived as irresponsible if he does. The agreement is likely to be kept as it is to a large extent, but Hollande will probably need to renegotiate parts of it, to appear in a good light to the voters. The fact that he is new to the international political arena will also contribute to some uncertainty and noise, but we do not think this represents a policy change, only minor adjustments. The alternative would be a political suicide. In light of this, the changes will not affect investors that much.

Will Greece leave the eurozone?

We have previously expressed that Greece should leave the eurozone, as it quite simply is too different from the EU’s core economies. We believe there is more than 50% probability that Greece will exit the euro, which will be good for both Greece and the eurozone, but it must happen in an orderly manner.

How do the results of the French and Greek elections affect demand for assets?

Political risk is difficult to predict and difficult to deal with. All other things being equal, we will in the short term be a little more reluctant to consider investments in France. The election will however not have any immediate impact on the portfolio. We feel confident in the investments we currently have in France. With regards to Greece, the Delphi Europa fund has no exposure there, and nor shall it. The French and the Greek elections do not affect the fund’s investment strategy, which basically is aimed at Western European companies.


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