Greece: As Stock Market Reopens, Grexit & Election Loom -- Barron's Blog

       

By Dimitra DeFotis
        Just when you thought things were calming down in Greece, headlines have erupted about political infighting and an internal "hacker" studying Grexit scenarios.
        The Global X FTSE Greece 20 ETF ( GREK) was up 0.2% for the week. It fell nearly 3% in July, even though Greece averted a Grexit and is negotiating a third bailout of EUR86 billion ($96 billion). The good news: shares on the Athens exchange will resume trading on Monday after weeks of inactivity.
        The not-so-good news: Greece could be headed for snap elections, which complicates discussions and votes in August before a crucial Aug. 20 payment to the European Central Bank. Political infighting and information leaks to the media seem par for the course, rather than economic confidence building.
        The latest example: Prime Minister Alexis Tsipras acknowledged that he authorized former finance minister Yanis Varoufakis to come up with contingency plans for a Greek exit from the euro-currency union. The Wall Street Journal reports that a newly-released phone call revealed that Varoufakis "hired a friend and information-technology specialist months ago to hack into the Greek tax commissioner's data" to set up a parallel payment system based on IOUs in case Greece could no longer stay afloat using euros. See the WSJ story, " Greece's Tsipras Called For Euro-Exit Contingency Plan."
        SGH Macro Advisorsin New York thinks Tsipras' strength is building, and that International Monetary Fund won't block the new bailout even though it is pushing European governments for Greek debt relief if it is to participate. SGH's Sassan Ghahramani and K evin Muehring write:
        "For all the domestic challenges Greek Prime Minister Tsipras faced and will still have to face after striking a painful compromise bailout deal with the EU, the political agenda is and will continue to be driven by a strengthened - not weakened - Tsipras; he has been polling a whopping 60% in the most recent popular personality polls and still leading a party that is maintaining an all but insurmountable 15-20% lead over the New Democracy opposition.
        Furthermore, not only have we been expecting Tsipras to survive any defections from the noisy and restless Left Platform of Syriza, as was indeed played out in [the July 30] internal Central Committee meeting, we continue to expect Tsipras to be further strengthened by elections that now look all but inevitable for September."
        And now it is August, a big month for tourism, which accounted for EUR17 billion (about $19 billion), or 9.5% of Greek gross domestic product in 2014. Tourism contributed as much as EUR45 billion in indirect benefits from spending in shops, restaurants, tourist sites and elsewhere, according to the Institute of Greek Tourism Confederation (SETE). Anecdotally, tourism is picking up, but it's not clear the evidence supports this WSJ headline: " Greece Makes Fast Recovery in Tourism."
        (END) Dow Jones Newswires

        July 31, 2015 18:14 ET (22:14 GMT)

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