While nearly 80 per cent of the 511 Trustnet readers polled said they remain fully invested, this does little to belie a sense that investor sentiment is waning. Almost one quarter of respondents replied "not yet" when asked if they had reduced their exposure, suggesting that investors remain ever watchful of the situation.
Source: Trustnet.com
This morning the IMF did little to alleviate the uncertainty. The decision of whether the vital €12bn bailout will be awarded has been delayed until Greece introduces further austerity measures.
To add to its woes, the government said it must receive the money by July if it is to avoid defaulting on its loans, and prime minister George Papandreou faces a vote of no confidence in the Greek parliament tomorrow.
Financial markets have responded negatively to the news, with the euro showing signs of weakness.
"The euro started the morning on the back foot as the International Monetary Fund delayed their decision on agreeing financial support for the Greek bailout," commented Lee McDarby of Investec Corporate Treasury.
"The IMF wants the Greek government to commit on more stringent budget cuts and privatisation of government assets before agreeing on the release of more funds. [The vote of no confidence] could potentially delay the IMF’s decision," he added.
"As fears have spread throughout the eurozone periphery, with Spanish debt being scrutinised last week as the market demanded extra yield on its 10-year bonds, all eyes are now on the eurozone finances."
Kerry Nelson, managing director of Nexus IFA, says the rationale for pulling out of European funds doesn’t make sense.
"There are some real dogs in Europe but there are also a lot of opportunities," she said. "The great thing about globalisation is it means that many good European companies derive a lot of their earnings from outside the EU."
"If you are going to take the stance of pulling out then you should’ve done it a year and a half ago when the problem emerged. Investors obviously fear a default but by that rationale, people should be pulling out of the UK. Domestic banks have quite a high proportion to Greek debt," she added.
Nelson maintains that the long-term prospects for investing in Europe are still good and investors should be looking for the best managers who will be careful to protect their funds from downside risk.
"If the worst happens, there is likely to be a short, sharp hit – a sort of knee-jerk reaction – but markets always over-react. We saw that with the Japanese earthquake. The banks have enough money to deal with the worst-case scenarios. I find it hard to believe they won’t have thought about contingency plans."
"The bottom-line is that long-term prospects are still good and investors shouldn’t react too much. There are plenty of good companies in Europe and that is what people are invested in."