European  

Market View: Greek election result stokes wider Europe fears

Paras Anand, head of European equities at Fidelity Worldwide Investment

Mr Anand argued that there are reasons to believe that the impact for European investors and even for economic growth across the region may be more modest than feared.

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He explained that in order to establish a stronger foundation, the Greek economy must move toward a broader base of tax revenue, which will only happen if a deep-seated culture of avoidance is addressed.

He said: “The emphasis of key creditors within the eurozone has already shifted from austerity to reform and Syriza may find greater support from the mainstream European parties than its ‘radical’ tag would suggest.”

Mr Anand challenged suggestions that Syriza’s victory will spur populist parties across the region to similar successes, stating that the party’s core political agenda will fall way short of the hopes of the more radical factions.

He also tempered fears of contagion risk, noting that Europe is in a “much more robust” position today than it was at the last peak of the sovereign crisis in 2011.

“That is not to say that tail risks within the eurozone have evaporated entirely, it is just to emphasise that the degree to which localised issues have the capacity to materially and immediately alter the risk premium throughout the region has clearly reduced.

“To that end, it suggests that returns are more likely to be driven by fundamentals going forward to a greater extent than has been the case at various (sometimes extended) points over the last few years.”

peter.walker@ft.com