Looking back at the Greek Crisis

Investors can be forgiven for feeling rather nervous of recent economic and political events. Clients have become concerned over the past months as the FTSE 100 Index has lost its poise above 6000 points. Some would suggest this illustrates a healthy level of scepticism on the part of investors. Others might suggest that the FTSE 100 index is not a relevant barometer for investors in multi-asset class strategies (such as ours) and therefore should be ignored. Ultimately, it is the most recognised investment barometer in the UK and therefore acts as an ‘anchor’ in peoples’ minds.

This week, issues ranging from the impact of the political turmoil in Greece, the strikes here in England, to the continuing job losses at Lloyds and HSBC have led to clients’ looking for comfort. In our opinion, the simplest way to understand the true impact of events is through the behaviour of markets. If risk assets such as equities fall for example, then we know that investors were not braced for the events that occurred. However, if they fall and quickly recover their poise, it can be read that the event was unexpected, but does not have a longer term implication. If they rise, the outcome was better than feared. 

So, how have markets and assets reacted to the events of the past quarter? Rather well in fact!

Below is a table of returns for a selection of indices for the year to date and over the past calendar quarter. For those who may not know, the FTSE ALL Stocks Index represents the UK Gilt market.

Source: Morningstar, 30^th June 2011, Bid-Bid basis

Had the TV and PC been broken these past few weeks you could be forgiven for asking: “Did I miss something?”

Facts are facts, after all.

Opinions constitute our judgement as of this date and are subject to change without warning.