Just a few months ago, news out of Greece tended to have a significant impact on regional markets. Not so these days.
Asian investors woke up to news yesterday that Greek Prime Minister Alexis Tsipras had won the country's latest election, receiving a fresh mandate to carry out reforms to lift Greece out of its debt crisis. But investors promptly shrugged off the news.
They now have other concerns on their minds, such as an economic slowdown in China and when the United States Federal Reserve might raise interest rates.
Singapore shares ended yesterday virtually unchanged - just 2.68 points higher. Other Asian markets were mixed, with Hong Kong, Seoul and Sydney falling between 0.8 per cent and 2 per cent each. Shanghai shares rose 1.9 per cent as Chinese President Xi Jinping set off for the US on a visit that businesses and investors hope will result in trade agreements.
"Markets are currently being dominated by global growth issues and the timing of the Fed rate hike," ABN Amro's head of macro and financial markets research, Mr Nick Kounis, told The Straits Times. "Greece has, for a while, not been a systemic issue, especially since it reached a deal with its creditors, and therefore it has not been driving financial markets."
Even European markets are unlikely to feel any great impact from the outcome of the Greek election, said UBS economist Dean Turner in a report on Sunday. "Greece's challenges are clear to all, and the new government's legislative agenda is largely determined by the MOU," he wrote, referring to the Memorandum of Understanding that Greece signed with its creditors last month.
These are the European Commission, European Central Bank and the International Monetary Fund.
This deal promises a third bailout package for the debt-ridden nation, under which Greece will receive €86 billion (S$136 billion) over three years, as long as it commits to radical economic and fiscal reforms.
Bank Julius Baer's fixed-income research analyst Eirini Tsekeridou said the election results raise the risk that these tough reforms might not be implemented according to the agreement. Mr Tsipras' left-wing Syriza party has shown little ownership of the deal and has, in fact, campaigned against the very measures it calls for.
Analysts from Columbia Threadneedle Investments agreed, saying in an e-mail to The Straits Times that Mr Tsipras will have a tough time pushing through the reforms demanded by Greece's creditors.
This, in turn, could threaten Greece's chances of receiving debt relief, which it sorely needs and which its creditors have dangled as a possibility - if it meets its end of the bargain.
"Our own view is that Greece's long-term debt-to-GDP (gross domestic product) dynamics are unsustainable and that some form of debt forgiveness or debt write-offs will be needed in time," the Columbia Threadneedle analysts said.
"Even if the rescue plan does work, the bailout is a multi- year programme, and therefore the debt situation will not be resolved at any point in the near future."
But even if Greece ends up jeopardising its own debt recovery plan, Bank of Singapore chief economist Richard Jerram said this will have little impact on financial markets or the European economy.
"The world moved on from Greece when it became apparent that even a default and euro exit would have little market impact."
After all, Greece contributes less than 3 per cent of the euro zone economy and "it is clear that the turbulence of recent months had no impact on the cyclical recovery being seen in the rest of Europe", he said.
