Speaking to CNBC-TV18, Manish Singh of Crossbridge Capital says if the vote for referendum is a yes then Greek Prime Minister, Tsipras‘s, political career would come to an end.
Crossbridge Capital's Manish Singh is confident that emerging Asian markets will continue to do well as European equities will rally. He says the Greece overhang is fading and the European Central Bank's (ECB) measures will prevent contagion.
Speaking to CNBC-TV18, Singh says if the vote for referendum is a yes, then Greek Prime Minister, Tsipras’s, political career would come to an end, adding “if there is going to be a confession or a deal they might do it now and avoid the International Monetary Fund (IMF) default which could happen today and all the repercussions that come along with it.”
Concerned over the Greek economic situation, he wonders if Greece has a falling Gross Domestic Product (GDP) already, what would happen to Non Performing Loans (NPL).
Below is the edited transcript of Manish Singh’s interview with CNBC-TV18's Anuj Singhal and Reema Tendulkar
Anuj: What do you make of this news. We have seen quite a bit of recovery in our markets at this point in time?
A: This news is positive. Of course there have been so many moving targets and moving news. It is difficult to take anything on face value or seriously until we get a full confirmation. But it is definitely a positive news and it is not surprising because remember capital controls are a big thing and capital controls are going to make the economic situation really bad and if Greece already has a falling Gross Domestic Product (GDP) can you imagine what happens to Non Performing Loans (NPL). So, it is a cycle effect which clearly the current Prime Minister would like to avoid.
The second thing to bear in mind, is that if the support for the referendum in the sense the vote is yes then that makes Prime Minister Tsipras position untenable which means that the end of his political career as well. So, it could be that they are giving consideration that if there is going to be a confession or a deal they might do it now and avoid the International Monetary Fund (IMF) default which could happen today and all the repercussions that come along with it. So, if it happens and if they are considering it seriously then it is a positive news definitely.
Reema: So, is it likely that the situation might not reach the stage of referendum and perhaps they will be able to stitch a deal before July 5?
A: This was a thought yesterday as well, that even if he has announced the referendum, do you think that he has the means and the logistics on July 5, Sunday. Now, it is possible that they have made a consideration and they may not be able to implement that. So, this news is just breaking news, so we will have to see what all happens, but there is good likelihood that the referendum may not get through and if we really want to do a deal then they would like to do it today so that they can avoid a default to International Monetary Fund (IMF) and it could all start looking better. I mean, I know maybe the situation for Greece is going to improve drastically, because they still will have a lot of pain, but at least this overhang that we have seen can be gone.
Anuj: For Indian market we have seen almost the entire loss down being recovered from yesterday’s low and with today’s rally. But for European markets, they are still down quite a bit from the point the crisis first came. Do you think those gains will be recovered or will it be a bit of a long haul?
A: I think gains will be recovered. In fact you are going to see a big rally in the peripheral market and European market as soon as the deal is confirmed because this is the overhand which is stopping the European equities from going higher, particularly the German equities which are very liquid actually. So, if you like to express a risk in the market, then go and sell the equities because those are the most sensitive ones. So, I have a very strong belief that European equities will rally, not only because of the overhang going away but also because the fundamental numbers are really getting better. And we have the European Central Bank (ECB) which is there to prevent contagion. So, if there is a positive evolution on Greece, it is a big positive for European equities.