After Eurozone leaders announced they had finally reached an agreement, markets reacted promptly and positively to the good news. However, leading market analysts are questioning the agreement benefits and are wondering why everyone rushed to celebrate.
M&G Investments’ Jim Leaviss noted that people must not take for granted the adoption of the agreement by the Greek Parliament because it goes against everything that the SYRIZA governing party represents.
Furthermore, IG senior market analyst Chris Beauchamp noted early on Monday that “although an initial deal has been struck, the hard work is not over just yet.”
“It would not be surprising to see Alexis Tsipras depart the stage before the end of the week, given that he is likely to face more than a little opposition to a deal that is worse than the one Greeks rejected last week,” he added.
Centre for Economics and Business Research senior economist Danae Kyriakopoulou said that all that remains to be seen is what will happen with the banking sector. Even though the government agreed to a bridge deal, Greek banks have suffered huge losses in recent weeks and the European Central Bank (ECB) may decide to not raise the Emergency Liquidity Assistance (ELA) before the first measures are voted by the Parliament, she added.
“The question is if this was a better deal for Greece, which was presented to them when they walked off with a referendum threat. The answer is certainly no. This is nothing but a pure embarrassment for Mr Tsipras who made his people suffer for 6 months. The country’s economic situation is even worse, and the deal they just got is not looking rosy either, as compared to the previous one,” said AvaTrade senior analyst Naeem Aslam.
“While European officials are patting each other on the back, traders are now ‘selling the fact’ and the euro is on the slide. The market still needs more details on the deal, and many investors are still questioning Greece’s longer- to-medium-term future as part of the Eurozone,” said UKForex’s Alex Edwards.
Finally, a few hours after the agreement between Greece and its creditors was reached, S&P managing director and head of sovereign rating Moritz Kraemer questioned the success of the new privatization fund – one of the most crucial negotiation issues. He indicated that the fund cannot be successful, judging from Greece’s past performance in privatization.
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