Bloomberg News

ABN Amro Wants Greek Resolution Before Turning Bullish on Stocks

June 21, 2011

June 21 (Bloomberg) -- ABN Amro Private Banking’s chief investment officer said it’s too early to become bullish on equities as there’s not yet a clear proposal for how emergency aid for Greece will affect bondholders.

“The detail of the plans are far from sufficient to relax the market,” Didier Duret, who manages about $240 billion from Geneva, said in a telephone interview yesterday. “Confidence is still fragile. We don’t know what will be the value of these bonds if there is a voluntary rollover.”

The investment manager has maintained a “neutral” stance on stocks over the past three months while the MSCI All-Country World Index of developed and emerging markets slumped 7.5 percent from its May 2 high amid concern the economic recovery is faltering and that Greece will fail to repay all of its debt. Still, in the first six month of the year assets under management rose 2.4 percent to the equivalent of $240 billion.

Key to a second aid package for Greece may be a pledge by banks, insurance companies and asset managers to buy new Greek bonds to replace maturing ones, instead of European governments stepping in with taxpayers’ money. While Germany bowed to European Central Bank and French demands not to compel investors to buy new Greek bonds as the old ones expire, the lines are blurry between a “voluntary” and “compulsory” rollover that would lead rating companies to declare Greece in default.

“Still, we are more confident than many about the prospect of the euro zone resolving its debt woes,” Duret said.

Greek Riots

Greek Prime Minister George Papandreou overhauled his cabinet last week as rioters protested his austerity measures, while financial-market jitters sent yields on two-year Greek notes to more than 30 percent and drove prices on 30-year bonds to less than 40 percent of face value.

Papandreou’s government faces a confidence vote tonight after fending off a revolt from the ranks of his ruling socialist Pasok party in parliament last week and opposition parties rejected his call for a national unity government. The International Monetary Fund, contributor of a third of the bailout money for Greece, Ireland and Portugal, has warned European leaders that failure to take decisive action on the debt crisis risks triggering “large global spillovers.”

Duret recommended buying shares of companies that have strong pricing power -- where customer demand remains high without companies needing to cut prices -- including Caterpillar Inc., Actelion Ltd., Apple Inc. and Swatch Group AG.

--Editors: Andrew Rummer, Will Hadfield

To contact the reporter on this story: Adam Haigh in London at

To contact the editor responsible for this story: Andrew Rummer at

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