Spanish stand off?
Source: BNY Mellon , Author: Neil Mellor
Posted: Mon June 11, 2012 11:52 am

INTERNATIONAL. In a week in which the Spanish government appeared to raise the ante in its standoff with its EU partners, there was a derived sense, in some quarters at least, that Spain’s gamble might just work.

Unfortunately for Spain, however, there has been no genuine evidence as yet that Germany is at all willing to cede ground in its opposition to direct EFSF funding of the country’s banks, and in fact the same can be said of Germany’s position on a range of issues. Recall, for example, Merkel told her party faithful last Sunday that “under no circumstances” would she agree to German-backed Eurobonds.

However, this is not so say that the week has been devoid of any breakthrough: the FT’s headlines on Thursday suggested that some sort of bailout may yet be extended to the Spanish and extended with such limited conditionality that it would allow the sovereign to accept the deal ‘with honour’.

Whether the story holds water and whether the Spanish would accede to such a plan remains to be seen of course, but then, in view of a more widespread recognition of the fundamental, structural problems afflicting the Euro-area, it is by no means certain that even this action would do anything other than temporarily mitigate market doubts over the region’s stability.

The story may well evolve over the coming week of course, but then, there is also the small matter of next Sunday’s Greek general election looming over the market.

With polls suggesting a neck-and-neck race between Syriza and New Democracy, there is every chance that the outcome will closely resemble its most recent predecessor – resulting in a similar stalemate and a similar debate as to Greece’s future in the Euro-area.

Note: This is the latest Weekly Preview by Neil Mellor,  Currency Strategist at BNY Mellon.

 

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: November 24, 2014
UAE. Qatar and UAE share equal first place globally, with Saudi Arabia in third position; Overall tax cost and compliance burden lower for businesses around the world.
date:Posted: November 24, 2014
UAE. Low interest rates, evolving investment strategies and a growing appetite for alternative asset classes causing shift in SWF investment strategies; Regional SWFs are viewing the West with caution and have redirected a portion of their funds back into the Middle East.
date:Posted: November 24, 2014
UAE. The gap between low market expectations and actual investment potential in the resources sector has reached very attractive levels; Resource equity returns are now increasingly driven by improved capital allocation and restructuring within companies, making stock selection ever more key.
dhgate