How Markets Will React to Greek Referendum

This is how Goldman handicaps the possible voting outcomes and the subsequent reactions:

 

Result of referendum likely to prove less pivotal than how Greek domestic politics evolves in response to it. We envisage three main scenarios following the referendum:

1. A ‘Yes’ vote, followed closely by the resignation of Messrs. Tsipras and Varoufakis and the formation of a new Greek government. This is likely to be the most market-friendly outcome. Clearly, its implications will hinge crucially on the character of the new government. A government committed to reform, credible in the eyes of the creditor institutions and with a mandate to act (e.g., a technocratic government enjoying a broad base of parliamentary support and committed to a limited tenure followed by elections) could move forward to a new programme that would allow a resumption of Greece's financial and liquidity support. Weaker governments that fall short on these dimensions would likely struggle to move forward with the same vigour and pace.

2. A ‘Yes’ vote,

Continue Reading