The euro zone leaders struck a deal with private banks and insurers on Thursday for them to accept a 50% loss on their Greek government bonds under a plan to lower Greece's debt burden and try to contain the two-year-old euro zone crisis.
Arjuna Mahendran, managing director and head of investment strategy (Asia) of HSBC Private Bank gave his view on the decision that came in through the EU summit. He further mentioned that the markets could see a happier ending than originally anticipated for 2011. Here is the edited transcript of his interview. Also watch the accompanying video. Q: What did you take away from the decision that came in through the EU summit and the way markets have reacted to it?
A: The decision was more than we had expected. In July this year, the European governments were at complete odds with each other in terms of achieving any consensus at all.
It was an achievement that they managed to hammer out the expansion of the stability fund to 1 trillion euro with leverage and agreed on the 50% haircut on Greek debt. These two were difficult issues to get consensus on.
To some extent, the markets have capped the downside that we were fearful of in the run up to the European heads of government
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