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Investment update – Greece

Posted 3 July 2015 2:35pm

Update by Commonwealth Superannuation Corporation, trustee of the Government’s public sector and military super schemes including CSCri.

Key points

  • Member super savings have no direct exposure to debt securities issued by the Greek Government
  • Direct equity exposure to Greece was also pre-emptively minimised

Recent market volatility

Although there has been a recent increase in equity market volatility, the level of volatility remains well below crisis levels. A good indication of this is the global price of credit (based on 5-year credit default swaps) which suggests that global financial markets believe there is a low risk only of Greek’s financial problems spreading to nearby countries (known as ‘contagion risk’).

The impact on global markets from Greece either exiting or remaining within the Eurozone is ambiguous. What we do know is that:

  • over the past six years, policymakers in Europe have been working to insulate their financial system from any systemic risk associated with a Greek debt default and exit from the Eurozone;
  • the US is experiencing a steady, albeit shallow, business-cycle recovery;
  • consequently, the US Federal Bank (‘the Fed’) is expected to cautiously increase interest rates from zero within the next seven months; and
  • China is actively engaged in policy easing to manage its internal macroeconomic structure, while building resilience to any increase in US interest rates and contagion-risk from Greece.

Next steps

We continue to monitor the situation in Greece carefully, which means:

  • assessing the exposure of member super savings on an ongoing basis, and
  • speaking regularly with our global investment managers.

More information

View investments to learn more about the investment of your superannuation.

General advice

This investment update provides general information only, and has not taken account of your personal objectives, financial situation or needs. Before acting on any general financial advice, you should have regard to your own objectives, financial situation or needs.

You may wish to obtain financial advice tailored to your personal circumstances from a licensed financial advisor. Learn about the fee for service financial advice available to you.  

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