13 Jul 2015 09:08

Ten general questions on the Greece situation

After the clear result in the referendum the the Greek tragedy has deepened further. The Greek government has decided to keep banks closed and there is a shortage of cash in many ATM´s. Here are some common questions about travelling, payments and banks.

I have planned to visit Greece this summer. Is that possible?

Since the situation is unpredictable the best advice is to stay in close contact to your travel agency. So far, Greece tourism has not been negatively impacted by the economic and political turbulence. For Greece, it is important to safeguard tourism as an important income source, and therefore to provide a working payment system.

But, what do I do if the banks are closed. Does it work to take out money at ATMs?

Greek banks are closed for the time being, and a withdrawal limit of 60 euros per day will prevent Greeks from emptying the country’s ATMs. But according to the government, the withdrawal limit does not apply for tourists´ cards.

Large withdrawals mean however that there is a shortage of cash in many places, and there is no guarantee that Greek ATMs will function. This means it can be difficult to difficult to take out cash. We recommend for visitors to Greece, to be safe, exchange money into euros before your departure to Greece.

Will my debit or credit card work in Greece?

According to the international card networks, it should work as usual to pay with for example Visa or MasterCard. However, paying with debit and credit cards is less common in Greece than in Sweden. Many restaurants, hotels, and stores do not accept card and prefer cash. That is why we recommend that you have several different payment methods and that you even carry euros in cash with you.

How will the Greek crisis affect the international banking system?

The outlook for Greek banks is uncertain and bleak, but a large difference compared to the situation a couple of years ago is that the deficits are now carried by the public sector. The global banking system's exposure to the Greek state is limited, and a Greek banking collapse is not expected to lead to significant repercussions within the international banking system.

Does SEB have exposure to Greek government bonds?

No, SEB has no holdings of Greek government bonds and has very limited exposure to Greece.

How are the stock market and mutual funds affected by the crisis?

Greece’s economy and its stock market make up a very small part of Europe’s and the world’s economy. The direct connection between Greece and the Swedish, European and US stock markets is thereby very limited. However, there is an indirect connection through uncertainty, which generally dictates what the aftereffects will be.

Increased geopolitical uncertainty can affect the possibilities for growth in other European countries.

How should I manage my mutual funds?

Although developments in Greece can create some short-term market anxiety, we remain long-term positive, mainly to equity investments. As for how you should manage your savings, it is a matter of time-frames and willingness to take risks that are important.

If you have savings exposed to equities and need some of the money soon, you may want to sell them now and put them in a more cautious alternatives, such as a savings account, even if the interest rate is very low or zero. Most important in that case is that capital is not likely to lose value.

If some part of your savings is for the long term, such as children savings or retirement, we see continued opportunities, including for mutual funds. The stock market will swing from time to time, but still offers good long-term potential. However, it is important to have a risk level for your savings to suit you.

Do SEB funds have holdings of Greek equities, real estate or government/corporate bonds?

The Greek economy is small and has only marginal impact on fund investments. In our Strategy and Total funds the direct exposure to Greece is negligible (the exposure varies between 0,005 and 0,016 per cent of the funds value.  

There are minor holdings (less than 0.1 percent of the fund value) in the SEB Världen fund, SEB Aktiesparfonden, SEB Trygg Placeringsfond, and the SEB Ethical Global Index Fund.

For SEB’s emerging markets funds, there are holdings of less than 0.4 percent of the value of the funds. In SEB's Östeuropafond, Greek shares represent 3.0 percent of fund value, which means that Greece as a market is heavily underweighted compared with the fund's benchmark.

There are minor holdings of fixed-income bonds (less than 0.2 percent of the value of the funds) in fixed-income funds SEB High Yield, SEB Credit Multi-Strategy and SEB European High Yield. 

What happens to mortgage rates? Will they go up or down?

It is difficult to determine in the current situation due the uncertain situation. The risk is that longer-term mortgage rates go up somewhat while short-term rates likely remain largely unchanged.

How are international payments to and from private individuals and corporations in Greece affected?

International payments to Greece will be processed as usual until further notice. However, the beneficiary won’t be able receive the funds on their account as long as the Greek banking system is closed. Customers should consider all risks involved before sending payments to Greece.