Electoral math - it's all Greek to me

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By:
Nathan Collins, Euromoney Skew
Published on:

With Greece's make-or-break election on Sunday, let's take a look at what pollsters - and bookmakers - are saying about the battle for the eurozone's soul.

Let's face it: since the two leading parties are neck and neck  – coupled with the fact that between 10% and 15% of voters have been polling as undecided – predicting Greece's election outcome and, thereby, the battle for the eurozone's soul is a somewhat fool-hardy endeavour. 

The majority of polling agencies are putting conservative, pro-bailout New Democracy in the lead by a margin of 1-3%. However, this falls within the margin of error – and one of the major pollsters actually puts anti-bailout Syriza ahead. If you scour election related websites, the common odds you’ll see are around a 60% probability of a New Democracy victory. 

But Credit Suisse – for one – don’t see New Democracy’s lead as set in stone:



“It is worth noting, however, that developments in the final week of campaigning ahead of the May 6 elections significantly affected the result. In addition, Syriza has managed to sustain the momentum it built up after the last elections. These two factors, coupled with developments in Spain and the high number of still undecided voters, can be enough to reverse the small lead New Democracy is reportedly enjoying”



 





Still, Intrade, a leading online prediction market for political events, highlights that relative to November highs people are sanguine over the prospect of a peripheral eurozone economy ditching the euro.



Understandably, Bank of Tokyo-Mitsubishi has divided their view of the situation into a “favourable” outcome (PASOK-New Democracy coalition) and a “less favourable” outcome (Syriza victory), obviously, with the latter seen as materially increasing the risk of a disorderly Greek exit:



“The less “favourable” and less likely potential election outcomes for the financial markets would involve Syriza gaining the largest share of the vote which would increase the near-term likelihood of Greece making a disorderly exit from the euro. Syriza has campaigned calling to stop the fiscal consolidation and economic reform programme required to satisfy external creditors.”



No surprises there, then. However, they aren’t too confident that the purported favourable outcome will heal any wounds:



“The more favourable election outcomes above could prompt a temporary short squeeze higher for the euro given already elevated speculative short euro positioning as the near-term risk of Greece leaving the euro-zone eases. However, we expect any relief rally for the euro to prove short-lived with a pro-reform coalition government likely to still prove inherently unstable and the ongoing loss of investor confidence in Spain still likely to weigh upon the euro.”



In the local press, an opinion piece in Greek newspaper Kathimerini comes out solidly in favour of one group running the country:


“It’s good to know that when your country is in danger, there are still responsible people who care about it, who are willing to risk their reputation for it, and who can handle extremely delicate issues using skill and common sense.”



So, are they in favour of New Democracy or Syriza? Neither. It seems that Lucas Papademos’s technocratic government has at least some fans.