European markets rallied after investors assumed more risk in the hope that further progress will be made on tackling the European debt crisis. A lot of the optimism yesterday was around the empowerment of the European Financial Stability Facility (EFSF).
David Buick, Partner, BGC tells CNBC-TV18 there is this painful long wait between now and various elections in Germany, meetings with the European Union taking place on October 18, culminating with the G20 meeting on November 2 before anything will be officially ratified.
Buick says if we get any adverse leaks from various countries which are counter productive to agreeing to the package that has been proposed, then markets could retreat very quickly. Below is a verbatim transcript. For complete details watch the accompanying video. Q: This buoyancy that one sees in European markets, what is it clinging to by way of hope and do you see it as definitely having put a bottom for now in the stock markets?
A: There is a very strong will which started off in New York last night, followed through to Asia today and we have obviously got a very important rally here in Europe with the FTSE up 2%, the DAX up 3% and the CAC up 2.7%. They want these initiatives taken by the IMF and the World Bank to work.
We have this very painful period between now and various elections in Germany and also meetings with the European Union taking place on October 18, culminating with the G20 meeting on November 2 before we can honestly say anything will be officially ratified.
Cynics will say there is an awful lot to be agreed here, not only are the problems with the German electorate but also being able to get some of these austere packages through in terms of cutting debt and public expenditure.
All has to be agreed before the facilities to increase the EFSF out from 440 billion Euros to 2 trillion Euros together with finding fresh capital for banks and buoying that up. There is a lot to be done in that period as well as agreeing on the bailout for Greece and how much of a haircut we are going to have to take for that.
All in all we need to be positive because if this policy were adopted then I wont say we are out of the woods but certainly it does make the outlook look for the industries, business and commerce more to the point, growth to the world, that much better. Q: There is news now from the Spanish Finance Minister who said USD 2 trillion Euros for the EFSF is not on the cards. Do you think it
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
