World Business

Investors expect Greek default

By Rich Miller (China Daily)
Updated: 2010-06-10 11:30
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WASHINGTON - Global investors have little confidence in Europe's efforts to contain its debt crisis or in European Central Bank President Jean-Claude Trichet, with 73 percent calling a default by Greece likely.

Only 23 percent say they expect the region's almost $1 trillion rescue package to both keep the European monetary union together and prevent a debt default by a government, according to a quarterly poll of investors and analysts who are Bloomberg subscribers. More than 40 percent say Greece is likely to abandon the euro.

"There is clearly a risk of a breakup of the euro," says Geoff Marson, managing director at a Guernsey subsidiary of London-based Odey Asset Management, which oversees about $6 billion.

Trichet, whose ECB supported the rescue package by buying bonds of Greece and other European governments, saw his approval rating tumble from a January Bloomberg poll.

A plurality - 48 percent - give the 67-year-old central banker an unfavorable rating in the latest poll, while 41 percent view him favorably.

In January, Trichet received a 60 percent approval rating, with 27 percent regarding him negatively.

"Trichet has sacrificed the ECB's independence by helping to rescue Greece," says Cyril Boudin, a participant in the poll and a derivatives trader at Unicredit Group in London.

Market slump

Stock markets worldwide have slumped and the euro has plunged as Europe has struggled to defuse its debt crisis.

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The Stoxx Europe 600 Index has fallen 12 percent from its 2010 high on April 15, while the euro has lost about 17 percent against the dollar since the start of the year.

More than 60 percent of those surveyed say they expect the euro to fall further against the dollar over the next three months.

While the European currency may be due for a "corrective bounce" in the short run, "longer term, the market has parity in its sights", says Marson, who took part in the poll.

Bloomberg News