Sep 19th, 2015, Greece is heading on a neck and neck elections, but a string of latest polls indicate SYRIZA’s marginal lead

·         Greece elections continue to appear as a neck and neck battle. After last Wednesday’s polls which were showing a narrow lead of New Democracy, eight polls were published during the last two days indicating a marginal lead of SYRIZA, which varies from 0.5 up to 3.0%.  

·         All polls were showing that Golden Dawn (neo Nazi) will end up third, and three political parties will be fighting to surpass the threshold of 3% and enter in the next parliament i.e. Union of Centrist (pro Europe, one man show party), Popular Unity (former SYRIZA euro sceptics) and Independent Greeks (former Tsipras’ government ally). Last but not least, undecided/undefined voters are recorded above the level of 10% which is crucial for the final outcome.

·         In an effort to attract the undecided voters, the two main rivals avoided to talk about the real agenda and used tough accusations against their rivals on corruption related matters. More specifically:

o   SYRIZA’s Tsipras urged the Greek voters during his last speech at Syntagma Square that these elections represent the last opportunity to battle with Greece’s elites and corruption, which are linked to New Democracy.

o   New Democracy’s Meimarakis during his interview at SKAI TV station accused SYRIZA that is heavily involved in corruption mentioning a) the last conflict of interest case of Flabouraris, who is the former minister of state and mentor of Tsipras and b) that there are SYRIZA’s MPs who made profit out of Grexit scenario, implying the number of SYRIZA's ministers who withhold investment portfolios which also includes hedge funds.

·         ECB’s Draghi urged Greece to reform its pension system in order to prevent it from its collapse.  According to Reuters, Draghi mentioned in his response to a MEP’s request that “The sustainability of the pension system is crucial from a social fairness perspective, not least because it is necessary to ensure that the Greek state remains able to pay pensions in the longer term,”.

·         According to Greek Tourism Federation, the tourists arrivals at Greece’s airports increased +by 6.3% during the Jan-Aug period (vs. +16.5% during the same period last year). According to Greek Statistics Authority (HELSTAT), the total turnover generated by tourism increase by +10.9% during Jan-Jun period (vs an increase of +17.2% during the same period last year). It appears that the turnover increase during the 2^nd quarter of 2015 showed an increase of 13.4% vs. an increase of 6.7% which occurred during the 1^st quarter 2015.

·         The services sector of Greek increased its share to 85.2% of GDP according to HELSTAT. It appears that services sector has gradually increased its share from 82.1% in 2010, due to tourism. The total number of tourists arrivals for 2015, is expected to cross the level of 25.5 mios which represents an increase of 8-10%.

Risk assessment. It is still very difficult to predict Greece’s elections outcome. Undecided voters (>10%) will determine the final outcome. In addition, weather forecast indicate a glorious Sunday, which increases probability to keep a number of voters away.

In general, the probability of a Grexit scenario has been diminished dramatically and secondly the country risk profile has been significantly lowered compared to the period before July 13^th. This is also reflected to the 10 year bond yield which dropped below 8.30% yesterday (compared to close to 20% before July 13^th).

These elections are very different compared to all previous ones because the previous dilemmas such as memorandum vs. anti-memorandum, Europe vs. Grexit have ceased to exist. In these elections, most political parties agree on euro, implementation of 3rd MoU and structural reforms.

In addition, it is highly likely that no political party will win the majority of next parliament. But even if there is a majority, it is highly unlikely that Greece will have one-party government.

It is highly likely that the 2 out of three, small political parties which struggle to enter in the next parliament, will fail to achieve this target. Assuming that the next parliament will have 7 political parties and no parliamentary majority, we could have the following scenarios

1.       SYRIZA win. Tsipras has rejected the ‘Grand Coalition’ scenario, hence he will aim to achieve a coalition government with PASOK, Potami and LAE (if it achieves its entry in next parliament).

a.       SYRIZA won’t be able to form a coalition government with LAE because a) there is no ground for an agreement as regards the implementation of 3^rd MoU b) PASOK and Potami won’t agree to participate in a coalition government with a Eurosceptic party such as LAE.

b.      SYRIZA will aim to form a coalition government with PASOK and Potami, which is feasible and highly likely. The basis of the coalition government will be the 3^rd MoU which has been ratified by all three political parties. New Democracy will remain the main opposition political party but within European Context, hence it will also ratify the agreement of Greek debt restructuring which . Greece’s return to normality will occur at slow pace.

c.       The scenario of a coalition government between SYRIZA and Independent Greeks (the same government as before), it highly unlikely. This due to low probabilities that Independent Greeks will surpass the 3% threshold and enter parliament.

2.       New Democracy win. Meimarakis has pledged to invite PASOK, Potami and SYRIZA. Tsipras will reject this offer, perhaps PASOK won’t participate but offer vote of tolerance.

 

      PASOK will try to capitalise from SYRIZA's internal rupture and probably will remain out of coalition  government but will offer vote of tolerance and will ratify the Greek debt restructuring agreement.

 

       New Democracy and Potami will form a coalition government, which is highly likely. The new government will proceed on the implementation of SYRIZA’s 3^rd MoU.  They will implement the legislation which included in 3rd MoU using as justification that it was agreed between Tsipras and creditors. Greece’s return to normality will occur at a faster pace.

3.      

Grand coalition scenario is highly unlikely because both main rivals will probable get over 30% of electorate leaving the role of opposition to Golden Dawn (neo Nazi).

 

 

Sep 18th, 2015, The end of eurosceptic era gets closer for Greece

·         Friday is the last day of pre-election period, but is still unclear which political party will end up first, and how many political parties will surpass the 3% threshold, in order to enter the Greek parliament.

·         Four more polls were published showing a neck and neck battle between SYRIZA (left) and New Democracy (centre right). The three out four (ALCO, Kappa Research and Pulse) were showing a narrow lead of SYRIZA, which varied between 0.3-0.6%. The fourth one recorded a narrow lead of New Democracy by 0.3%.

·         Golden Dawn’s (neo Nazi party) leader Michaloliakos stated in an interview that his party accepts the political responsibility but not the criminal responsibility, of the Fyssas’ assassination, which occurred in Sep 2013.

·         According to local prominent newspaper Kathimerini’s sources, a new debt sustainability rule has already been decided and will apply soon after an agreement between Greece and its European partners. More specifically, there will an agreement that the annual spending on servicing the debt should not exceed 15% of the country’s gross domestic product.

·         the Bank of Greece reduced by 200 mios euros, the ceiling of Emergency Liquidity Assistance (ELA), due to gradual improvement of liquidity conditions. The ceiling of ELA is currently at 88.9 bios euros; it was at its highest level in July 22^nd (91.2 bios euros).

·         The General Secretariat of Public revenue will pull the plug of those enterprises which avoid paying VAT by carrying out fictitious triangular transactions. State revenues during the period Jan-Aug, were recorded lower than target, by approx. 4 bios (-12.4% vs. target).

·         According to ELSTAT, Greece’s unemployment was reduced to 24.6% during the 2^nd quarter of 2015, vs. 26.6% of previous quarter and 26.6% in the 2^nd quarter of 2014. According to Ministry of Labour, Greece’s population decreased by 300,000 during the period 2009-2015.

·         The private construction was reduced by -15.1% in June 2015 due to political uncertainty. However, official data show that the private construction increased by 7.7% during the period Jan-Jun. 

      ·         The number of new cars has increased by 20.1% in August 2015. This figure comes just after the dramatic decrease of -23.9% of July 2015 due to skyrocketing political uncertainty.  

·         The Federal Reserve kept its policy interest rate unchanged, showing reluctance to end an era of record monetary stimulus in a time of market turmoil and rising international risks.

·         The number of policemen and soldiers who have been killed in Turkey since a ceasefire with Kurdish militant group the PKK broke down in July, has now risen to more than 120. The neighboring country stands on the brink of chaos.

Risk assessment: the on-going polls show the return of bipartisanship. It appears that the battle for the first position which offers 50 additional parliamentary seats, increase the popularity of two main rivals to levels above 30% each. As it was expected, the increase of concentration occurs at the expense of smaller political parties.  

In addition, it is still unknown what will be the implications of the statement of the leader of neo Nazi party Golden Dawn as regards the acceptance of the political responsibility of Fyssas’ assassination. At the moment, GD appears to be the third political party in polls. Although GD's leadership pursue an extreme political agenda, its popularity represents mainly a protest vote.  

In addition, there are three political parties which struggle to surpass the threshold of 3% and enter in the next parliament i.e. a) Independent Greeks (former Tsipras government ally), b) Centrist Union (a populist but pro Europe, one-man-show party) and c) Popular Unity LAE (new Eurosceptic party which was formed after SYRIZA’s rupture).

According to Greece’s elections system, the higher the total number of votes of political parties which are left out of parliament, the lower the percentage that is required for the winner in order the first political gain parliamentary majority.

If all these three small political parties don’t manage to enter parliament (which is highly probable), the first political party won’t only get the 50 additional MPs but also gain the majority of next parliament, with percentage of votes between 32-35% only.  

In any case, all polls suggest that the next Greek government will be more centrist and more stable, compared to the previous one. Last but not least, all polls suggest that the next composition of Greek Parliament will better match the pro-European stance of Greek society and that the local Eurosceptic movement may

face a humiliating defeat.

Sep 17th, 2015, Greek Elections 2015: new polls point to a narrow lead for Centre right

·         A new polls shows a narrow lead of 0.5% in favour of New Democracy (centre right) vs. SYRIZA (pro Europe left).

More specifically, the University of Macedonia’s poll which was presented by TV station SKAI, showed New Democracy at 30%, which corresponds to an increase by 2.5% points compared to previous survey. In the same poll, SYRIZA which was recorded at 29.5%, which represents an increase of 1% points compared to previous survey of the same pollster, which was published last Friday.

·         The Ministry of Finance announced a primary surplus of approx. 3.8 bios euros during Jan-Aug period, vs. target of 3.264 bios. Net revenues reached the amount of 28.7 bios which is less by 4.07 bios (-12.4%) vs. target.                                                                                                                                       

·         The recent drop of oil price brought the production of energy via natural gas to be cheaper than the energy produced by lignite. This is very important for Greece's energy mix, because lignite represents the biggest energy source.

·         In an effort to protest against the planned tax increases and changes in their pension system, a number of farmers are gathering in various junctions of Northern Greece.

·         Athens Stock Exchange Index increased by 1.51% and trading volume suprassed the level of 50 mios euros. However, there are no changes as regards the yield of 10 year Greek bonds which still fluctuate around 8.75% (it was closed to 20% just before the agreement of July 13th)

·         Refugees’ influx continues mainly from Easter Aegean islands. Although Greek authorities announced the opening of two reception centres in Attica and Thessaloniki, they also raised alarm that thousands of refugees will be trapped in Balkans due to borders’ closures of various central European countries.  

·         ECB’s Constacio stressed out that Europe’s aging society is committing ‘demographic suicide; and that the continent needs immigrants to keep its workforce from shrinking further.

Risk assessment: Greece’s elections are still too close to call. However, it is the third poll published this week which shows a narrow lead of New Democracy (centre right).

The percentage of voters who responded that won’t go to vote surpass the level of 10%. This was close to 4% in last January’s survey. The biggest part (28%) of those who responded  that they will abstain from the forthcoming elections, voted for SYRIZA in January’s elections. It is still unpredictable what % of these voters will finally choose to abstain from elections and if they vote, which party they will finally choose.

All polls suggest that Greece's bipartisanship system increases and will comfortably surpass the level of 60%. As a result, this will occur at the expense of smaller political parties. There are three small parties which will struggle to surpass the threshold of 3% and enter next Parliament i.e. Independent Greeks (nationalists, former government ally of SYRIZA), Centrist Union (new pro Europe, centrist, one man show party with extraordinary characteristics) and Popular Unity LAE (new Eurosceptic party which was formed after SYRIZA’s rupture).

The percentage of votes which will go to political parties which won’t enter the next Parliament is crucial a) for elections’ outcome/winner and more importantly b) for the distribution of MPs among the political parties which will enter the Parliament.

Greece’s Ministry of Finance announced a higher primary surplus vs. target, but didn’t provide a detailed table to show the extend of Greek state’s arrears to vendors. This appears to be of immense importance for budget 2015. However, state's arrears surpassed 5 bios during the last 8 month period (it was close to 3 bios in January 2015). 

Although 1.7 out 4 bios of less state revenues, come from the profits of Greek bonds which are held by other European banks, the revenues’ hysteresis is significant. This is a result of both structural issues (tax evasion/black economy) and a consolidation of the culture ‘I don’t pay’ which was supported by SYRIZA before it gained power last January. Needless to say that it is still uncertain if Greece will achieve the budget 2015 targets, despite the new pensions’ cuts and VAT’s increases which have been approved and will be occur during the last quarter of 2015.   

The ongoing refugees' influx represents a significant factor of instability for EU and especially for Greece which represents EU's south eastern frontier. Although Greek economy needs additional labour force to tackle growth and pension system issues, it is absolutely necessary that EU will implement a strategy as regards the on going Middle East crisis. Last but not least, if the situation in Turkey escalates to a Kurdish independence war, EU may see Syrians to be replaced by Turkish refugees in the following years

Sep 16th, 2015, Greek Banks’ capital needs will be less than it wasinitially expected

·         A new poll showed that a) New Democracy (28.5%) is ahead of SYRIZA (28.0%) by 0.5%. 

       This poll was prepared by Pulse for local TV station Action24. It also showed: b) an increase of concentration in favour of the two main rivals (SYRIZA and New Democracy), at the expense of smaller political parties, which struggle to surpass the threshold of 3% in order to enter parliament and c) PASOK (centre left) manage to recover some of its previous popularity and gets the 3rd position ahead of Golden Dawn (neo-Nazi).

·         Greece’s Statistical Authority announced that the Import Price Index of Industry (MPI) fell by -11.5% in July 2015 compared to July’14 (which also showed a decrease of -2.1% compared to July’13). The 12 month average index (Aug-Jul) decreased by -8.8% compared to a decrease of -2.2% during the same period 2013-4

·         According to data published by COSCO PACIFIC, the containers’ traffic in the port of Piraeus rebounded in August, after a small decrease which occurred in July after the implementation of capital controls. More specifically, COSCO handled 249,100 containers in Aug’15 vs. 242,100 in Aug’14, which represents an increase of 2.9%.

 

·     According to JP Morgan, the Greek Banks will need significantly lower capital injection   compared to the amount which is included in 3^rd MoU (25 bios euros). It estimated the total amount to approx. 15 bios (private sector will participate with 4 bios). It used three different scenarios of increase of NPLs, due to the deterioration of economic conditions (+10, +15, +20 percentage points increase). According to JP Morgan’s report Alpha Bank and National Bank of Greece will need capital injection only in case of 3^rd scenario. In contrast, Eurobank and Piraeus Bank will need capital injection in all three scenarios.

 

·         the US investor Wilbur Ross stated in his interview to Bloomberg that ECB's scenarios as regards Greek Banks are to pessimist, and this may result to an unnecessary burden to taxpayers. He stressed out that the base scenario used, may represent a worse picture than the real one. Consequently, the wrong base scenarios will impact all stress test scenarios. Finally, this will result to higher capital needs and unnecessary higher borrowings.

Risk assessment:

Greece gradually returns to normality. All polls show that regardless which party will win elections, the next Greek government will be a more centrist and more stable government, compared to the previous one. At the moment, the ‘Grand Coalition’ government scenario loses steam, in favour of a coalition government between either SYRIZA, PASOK & Potami or ND, PASOK & Potami.

As it was stated in previous commentaries, the impact of implementation of capital controls to Greek economy, and especially to local banks’ capital needs, will be lower than it was initially expected due to the following reasons:

·         Most Greek enterprises were well prepared; inventories were increased during spring, cash was increased;  local corporates opened accounts abroad to handle receivables / payments. In addition, the majority of Greek citizens was well prepared by keeping cash out of local banks.

 

·         Black economy still represents a significant portion of local economy which continues to use cash for daily transactions; total cash was estimated approx. 50 bios before the implementation of capital controls (cash gradually decreases due to higher usage of bank cards to the benefit of local banks' liquidity position).

 

·         Due to the fear of deposit haircuts, borrowers preferred to use their bank deposits to reduce their debt  than risk a deposit haircut. As a result, unexpectedly the NPL formation has been slowing since the implementation of capital controls.

 

·         Tourism and exports (except fuels) continue their increasing trend, impacting positively local GDP; they also offset the reduction of consumer spending and investments due to the implementation of

capital controls.

 

 

Sep 15th, 2015, Meimarakis appears to come out as winner in yesterday’s TV debate

·         For two and half hours, the two main rivals of Greek elections were discussing lively on various political matters. In an effort to attract the undecided voters, who represent more than 10% of Greece’s electorate, the top two political leaders had numerous moments of tension and accusations.

·         Tsipras had no enthusiasm, his appearance had nothing to do with the previous dynamic young politician who was leading the powerful movement of SYRIZA during the anti-memorandum era. He didn’t appear comfortable, appeared relatively nervous and tired, was moving hands and body more than usual and was drinking water numerous times.

·         Meimarakis was calmer, was serious on critical matters, was attacking continuously Tsipras without arguing, occasionally used humour and sarcasm to deal with his rival. When Tsipras argued that he was negotiating hard, non-stop for 17 hour with creaditors, Meimarakis reacted sarcastically and said that 'Mr Tsipras, you are a prime minister and not hourly employee'.  

·         Tsipras insisted that there is no way that SYRIZA will form a coalition government with New Democracy. Meimarakis attacked Tsipras, by naming him as ‘the Prime Minister of 60 euros’ of daily limit for cash withdrawals and capital controls. However, it was apparent that despite the exchange of arguments and attacks, there was a good chemistry among the two politicians.

·        Refugee crisis continues to hit Eastern Aegean islands. Greece’s Coast Guard launched an investigation, in an effort to determine the causes of capsizing of a boat carrying 99 refugees, which occurred off coast of Farmakonisi last Sunday. So far, 34 bodies have been recovered, including 15 children and infants.  

·         During Saturday’s Eurogroup meeting Greece’s Finance Minister Houliarakis was warned that time is running out as regards the implementation of the structural reforms which are included in the 3rd MoU. Eurogroup chief Jeroen Dijsselbloem and European Central Bank board member Benoit Coeure were clear that there could only be some minor changes to the bailout agreement. In addition, the Economic and Monetary Affairs Commissioner Pierre Moscovici stated that there are still a lot of steps that Greece has to take up to mid-October.

·         Ahead of elections, Greek bonds’ yield fluctuate in a narrow range i.e. 10 year bonds fluctuate around 8.75% (it was close to 20% before the agreement of July 13^th) and 2 year  bonds fluctuate around 12.25% (it was close to 58% before the agreement of July 13^th). In addition, Athens’ Bourse had minor losses despite its FTSE’s downgrade from advanced markets to emerging, which occurred during weekend.

Risk assessment. In general, it was the first time that in a so called TV debate, we had samples of direct exchange of arguments. Historically, Greece’s pre-election TV debates were occurring in the mode of parallel monologues. Both politician showed respect to each other,  and in general, the debate was a significant example of modern dialogue and a step forward for local politics. 

Greece’s elections continue to appear as neck-and-neck battle. The agreement of July 13^th and the 3^rd MoU between Greece and its creditors, have completely altered the local political landscape. As a result, the majority of local electorate remain either skeptical or indifferent. Obviously, SYRIZA voters’ behavior appear to be the biggest question mark which will determine the final outcome. Until very recently, polls were showing that SYRIZA was managing to attract 50% only, of its January’s voters.

Tsipras' popularity has been dramatically diminished. This is because, Tsipras is battling using a new, more rational political agenda compared to his previous populistic one. He has to convince electorate that he guarantees European course and economic growth. He is not familiar with his new arguments and this becomes obvious when you listen to his pre-election speeches.  

However, pollsters are very reluctant to believe or confirm the unbelievable swing of voters.

On the other hand, Meimarakis has surprisingly unified Greece’s centre-right and challenges Tsipras for the first time on equal terms. Last but not least, in many polls Meimarakis’ positive opinions surpass those of Tsipras. He proposes the formation of a coalition government to tackle the significant economic and structural issues and deal with escalating refugees’ crisis, while Tsipras proposes self-reliant government.

If we think ‘out of the box’, Greece has to deal with economic issues of immense importance, amid a refugee crisis and fluid geopolitical environment. Consequently, it requires strong leadership/government which needs to be based on broad consensus. However, this out-of-the-box approach is against the lack of emotional intelligence which determined previous elections’ results.

Tsipras will remain the main political figure of local political system until Sunday. Regardless elections' result, Tsipras will either adjust fast and cooperate with other pro Europe political parties or will be proved a political bubble. 

 

Sep 14th, 2015, Greece's top two candidates face off in TV debate tonight, amid downgrade of local bourse

·         with just 7 days until Greeks head to the polls, the leaders of top two political parties battled it out on the small screen, in an effort to win undecided votes.

·         new polls show a neck-and-neck battle between SYRIZA (left) and New Democracy (centre right). The 4 out 5 polls showed a narrow lead of SYRIZA vs. New Democracy, which fluctuates between 0% - 1.2%. More specifically:

1.       Public Issue’s poll, which was published in SYRIZA’s newspaper ‘Avgi of Sunday’ showed both rivals to be equals at 31%, with PASOK keeping the 3^rd position at 8%, and an 8 party parliament. The former Tsipras’ ally ‘Independent Greeks’ (nationalists) don’t manage to surpass the threshold of 3% and enter next parliament.

2.       Kappa Research’s poll, which was published in the newspaper ‘Vima of Sunday’ showed a narrow lead of SYRIZA of 0.5%, with Golden Dawn (neo Nazi) following at 3^rd position with 7%, and a 9 party parliament.

3.       Pulse RC ‘s poll, which was published in the newspaper ‘To Pontiki’ showed both SYRIZA and New Democracy to be equals at 26.5%, with ‘Golden Dawn’ following at 6.5% and an 8-pary parliament.

4.       Palmos Analysis’ poll, which was published in ‘tvxs TV’ showed that SYRIZA increased its lead vs. New Democracy to 1.2%, with Golden Dawn (neo Nazi) following at 3^rd position, and a 7 party parliament.

5.       ALCO’s poll, which was published in the newspaper ‘Proto Thema’ showed a narrow lead of SYRIZA of 0.7%, with Golden Dawn (neo Nazi) following at 3^rd position with 6.4% and an 8 party parliament.

 

·          FTSE announced that effective March 1^st 2016, Greece’s bourse will be downgraded from ‘developed markets’ to ‘advanced emerging markets’. The downgrade is attributed to the implementation of capital controls due to political instability, which resulted to a) a five weeks closure during summer, b) extremely low trading volume.

·         As a result of 13,000 arrivals of refugees in Munich last Saturday, Germany temporarily re-imposed borders’ controls and halted train routes from Austria, as of Sunday afternoon. An emergency meeting of EU-28 member states’ interior ministers will take place today, where there will be a discussion regarding the redistribution of 160,000 asylum seekers and EU’s common policy on this matter.

Risk assessment. All published polls show that there will be a neck-and-neck battle. This is due to the so called ‘undefined vote’ represents a significant portion of polls’ responses (Public Issue’s poll recorded the ‘undefined vote’ at 26%).

Needless to say that the final preference/participation of undecided voters will determine elections’ final outcome. These voters voted mainly SYRIZA last January, but today either remain undecided or have changed their preference. In an effort to attract the undecided voters, both parties having been using TV spots with positive messages. Last but not least, tonight’s TV debate will play significant role as regards the final preference of undecided voters.   

After 14 years in FTSE advanced markets group of bourse, Greece will return to emerging markets. It will be a rare case of bourse, as Greece’s will be included in emerging markets while maintaining the currency stability of euro. Although the local bourse’s downgrade reflects economy’s significant contraction and political instability, the combination of emerging market status with euro, could be a profitable proposition as regards the emerging markets investment funds.

With Germany and other Central European countries re-imposing borders controls due to refugees’ influx, a) this may alter the Schengen Treaty, which is a major component of euro project and b) Balkan states (including Greece) will be facing increasing pressure.

The recent developments have further increased Greece’s geopolitical role because Greece's borders simultaneously represent Europe's ones. The latter increase pressure to local political system, to form a strong government ASAP, not

only to deal with significant economic challenges but to deal with refugees’ crisis, within European context, as well.

Sep 12-13th 2015, SYRIZA surges but polls still show a narrow lead

·         New polls reconfirm that Greek elections are too close to call. More specifically,

·         GPO’s poll showed a) a narrow lead of SYRIZA by 0.2% vs. New Democracy (ND) i.e. SYRIZA was recorded at 26% vs. while ND’s at 25.8%. ND was ahead of SYRIZA by 0.3% last week) b) Meimarakis’ popularity is still ahead of Tsipras’ one i.e. 45% vs. 42.9% c) 42.5% of voters are in favour of an all-party government and d) new Commons will consists of 9 political parties.

·         University of Macedonia’s poll showed a SYRIZA’s lead of 1% vs. ND i.e SYRIZA was recorded at 28.5% vs. ND which was recorded at 27.5%. The same poll was showing both parties’ popularity to be equal, last week.

·         Metron Analysis’ poll showed a narrow SYRIZA’s lead of 0.3% vs. ND i.e. SYRIZA was recorded at 25% vs. ND which was recorded at 24.7%. The same poll was showing ND ahead of SYRIZA by 0.6% last week.

·         EIB’s Hoyer stated will step up its operations in Greece regardless the result of forthcoming elections. EIB will focus on dynamic companies which pursue international strategies. EIB’s exposure is currently at 18 bios euros. 

·         Greece’s Ministry of Labour announced that the number of employees who were fired was higher than those hired by 16.7K, in August. Historically, this balance is positive during summer because of tourism.

·         Exports (without fuels) increased by +7% in July (annualised), despite capital controls, which is higher than July 2014 (+3.6%). On the other hand, exports including fuels decreased by 8% in July (due to drop of oil prices). Exports (without fuels) increased by +12.8% during the period Jan-Jul vs. a decrease of -2.3% during the same period last year.

·         Industrial production decreased by 1.6% in July 2015 (annualised). There was a decrease across all industrial sectors except electricity (+13.8%), pharmaceuticals (+5.8%), metals (+1.2%), tobacco products (+13.7%) and electronic products (+90.3%).

·         Sales of new cars increase by 25.8% in August vs last year. Sales of new cars were increased by 18.9% during the period Jan-Aug vs. 23.9% in 2014.

·         S&P maintained Greece’s rating at CCC and C as regards its long and short term debt respectively. It also predicts an economic contraction of -3% in 2015 due to capital controls. However, it stated that risk of Grexit has fallen below 33%.

·         New homes planning permissions increased by 14.8% in June 2015 vs. June 2014. However, new planning permissions refer to smaller surface (-9.2%) and volume (-14.8%).

·         Deadly clashes between Turkish forces and PKK the militant Kurdish organization, have intensified since a ceasefire collapsed in July. Residents in the mainly Kurdish town say they have been unable to buy food or medical supplies since the military imposed a curfew eight days ago. Turkey launched a security operation against Kurdish militants in Cizre last Friday, which has killed at least 19. Nils Muiznieks of the Council of Europe called the developments "distressing" and urged Turkey to allow independent observers to assess the situation in Cizre, which is home to more than 100,000 people.

Risk assessment

Greece is heading on snap elections amid deterioration of all leading economic indicators and fluid geopolitical landscape in Turkey and Middle East. A new strong, pro Europe government needs to be in place just after elections.

Despite new polls which suggest a neck and neck battle between SYRIZA and New Democracy, the big picture refers to a reduction of overall political risk and a consolidation of recent U-turn which occurred when Tsipras agreed with creditors on 3^rd MoU.

Although Tsipras’ popularity has been significantly decreased, and in some polls is lagging compared to his rival Meimarakis, he remains the main political figure of local political system. In addition,  Tsipras’ participation in the new government will facilitate the implementation of the structural reforms which are included in MoU because he is the one who agreed on terms and conditions of it.

PASOK (centre left), which is the political party which ruled Greece, the most during the last 4 decades, seems that gradually recovers some of its traditional electorate and fights to gain the 3^rd position from Golden Dawn (far right).

More specifically, although PASOK gained 44% in 2009 elections, lost most of its popularity because of austerity measures associated to the 1^st MoU (2010). Its power gradually reduced to levels below 5% (it gained 4.68% in the elections of January 2015). Practically, the recent Tsipras’ U-turn have justified its initial PASOK’s decision to sign off the 1st MoU with creditors. It is highly likely that PASOK will participate in the coalition government which will be formed by SYRIZA (in case that the latter become first in terms of votes).

Considering that a) the narrow gap between the two main rivals and b) 10-15% of voters are still undecided, this part of local electorate will determine the winner. This is due to the fact that undecided voters, voted mainly SYRIZA in January's elections; in addition, these voters, traditionally voted PASOK in the past, who saw that SYRIZA did exactly the same as their traditional favourite political party. Last but not least, PASOK has elected a new female leader, who  carries a historic name for PASOK voters.

This means that the increase of PASOK's popularity, if any, will determine if SYRIZA will win the forthcoming elections.