Grexit looks set to happen: Brokerages

In perhaps one of the most keenly watched voting in Greece, the people of the country rejected the terms of a bailout on Monday morning. Owing to this historic mandate by the people, most of the brokerages now feel that the exit of Greece from the Eurozone i.e. Grexit seems inevitable.

“Euro exit is our base case after a big ‘No’ by Greece. Greece leaving Euro baseline scenario with a probability of about two-thirds at present," JP Morgan said in a note.

Credit Suisse and Morgan Stanley believe that the probability of Grexit has now risen to 75 per cent. According to CLSA, the ‘No’ vote is the start of a rapid series of events that would end with Greece abandoning the euro. CLSA also believes that the Interntional Monetary Fund (IMF) will not be able to supply Greece with further credit if it is not paid.
HSBC, however, on the other hand believes that the ‘No’ vote by Greeks does not certainly signal a Grexit.

“The decisive ‘No’ vote in the Greek referendum is likely to lead to a rise in risk aversion. The reactions of the Greek government, the Eurogroup and the ECB are going to be crucial,” HSBC said in its note.

It is difficult to see equities doing anything but falling on this news, HSBC said, adding that the Greek exit from the Eurozone is still by no means a certainty.