Paul Taylor, Portfolio Manager of the Fidelity Australian Equities Fund – “The European crisis is firstly a crisis of confidence associated with the possible break-up of the European Union and Euro as a currency.
“The impact from this crisis of confidence for Australia would primarily be focused on the dislocation of European and global debt markets.
“This could potentially impact Australian corporates with higher debt levels as well as Australian banks seeking wholesale funding.
“Currently Australian corporates have very low debt levels and Australian banks have been reducing their dependence on wholesale funding due to the very strong growth in domestic term deposits and low levels of system credit growth.
“The negative impact from a crisis of confidence would likely be very short-term in nature and if anything would create a short-term buying opportunity.
“The second and broader category that the European crisis fits within is a global sovereign debt crisis. The global sovereign debt crisis includes the significant debt issues of many European countries but also the debt issues of many developed countries right around the world — including the United States. Debt levels of many developed markets are too high and need to be brought down to more manageable levels over a prolonged period of time.”