This note looks the crisis surrounding Greece and its public debt.

The key points are as follows:

– The ongoing Greek debt debacle, along with worries about increased bank regulation and Chinese tightening, has the potential to contribute further to a correction in shares in the short term.

– It’s unlikely that the Greek situation will seriously threaten the global economic and share market recovery. Greece is an extreme case in terms of its public finances, the risks are better known than with the sub-prime crisis, and so far there is no sign of any flow-on to the debt of key advanced countries.

– Shares were due for a correction, though the underlying backdrop remains favourable. We remain of the view that despite the current correction, the trend in share markets will remain up.

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