Is Grexit Best for Greece & Europe -- Barron's Blog

        By Dimitra DeFotis
        A Grexit may actually be the best solution for both Greece and the rest of Europe in the long run.
        So says Paula Wieck, a portfolio manager at CLS Investments, who argues that markets will over-react negatively if Greece the Eurozone. In a note submitted to us, Wieck writes that initially, a Grexit would result in high Greek inflation, a weakened currency, and a rattled financial system. However, she adds:
        "Once its currency stabilized and it started its own form of quantitative easing, all without the strict bailout rules currently in place, it could slowly put its economic and financial system back together.
        While most of Greece's external debt is held by the International Monetary Fund and the European Central Bank, very little is held by the private sector, all of which should be manageable in the case of a Greek default. The peripheral countries are in much better shape than they were several years ago, mitigating any signs of potential contagion. While we don't think the probability is high that Greece will default, we don't think the aftermath would be quite as dire as many anticipate. As we see it, any European market dips will likely be used as buying opportunities to add European exposure in CLS portfolios as the region still looks attractive relative to the rest of the world."
        On Wednesday, the Global X FTSE Greek ETF (GREK) fell 2.6% and Greek bank stocks retreated. Piraeus Bank ( BPIRY) fell 10%, Eurobank Ergasias ( EGFEY) fell 9%, Alpha Bank ( ALBKY) declined 5% and National Bank of Greece ( NBG) was off by 5.7%.
        (END) Dow Jones Newswires

        June 24, 2015 17:56 ET (21:56 GMT)

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