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Greece voted No….what next for Aussie equity investors

With the No vote in Greece over the weekend, we’ve pulled together some initial views on how this will impact Aussie equity investors. In short, uncertainty will remain.

1) What just happened?

The Greek population voted over 60% in favour of REJECTING new loan terms offered by creditors. These new loan terms included pension cuts and higher taxes. The “NO” vote effectively means the Greek people are in favour of defaulting on their loan obligations.

2) What will happen now?

Lots of negotiation. Here is what you need to know:

  1. The vote does not mean Greece will leave the Eurozone
  2. The vote does not mean Greece will drop the Euro in favour of the Drachma
  3. The vote does not mean Greece will be able to restructure its debt on more favourable terms

In short, the vote doesn’t resolve much at all! Investors should expect continued uncertainty about where Greece ends up over the coming days and weeks.

3) What does this mean for Australian shares?

As we see time and time again, uncertainty brings volatility. We have seen increasing volatility in both Australian and global stock markets over the past few weeks. Since April highs, the ASX200 has fallen almost 10%.

We have not seen debt markets shut, as they were in the GFC. Instead, we have seen debt become more expensive, particularly for riskier borrowers.

But with volatility comes opportunity, so it’s not all bad news.

4) How are Australian banks positioned?

We believe Australian banks are positioned very well to handle the increased uncertainty in markets:

  • A) Australian Banks are less reliant on offshore funding – Post GFC Australian banks now rely on wholesale funding to the tune of an average of $15-20bn per bank per year. During the GFC, that number averaged $30-40bn per bank per year.
  • B) Stronger balance sheets – capital ratios are very strong compared to history and offshore banks.


Investors should not expect a quick resolution to the Greek uncertainty. Despite the volatility, Australian Banks are positioned very well to handle any moderate dislocations in the market.


article care of Macquarie

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