WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: With a turnout close to 70%, Italian voters rejected on Sunday constitutional reforms proposed by the government by a wide margin, 59.1% to 40.9%. Taking full responsibility for the “extraordinary clear defeat”, PM Matteo Rentzi announced his decision to meet today President Sergio Mattarella to hand in his resignation. Market reaction to the referendum outcome has proved muted so far on the view that though Italian voters rejected the reforms and Matteo Renzi resigns, early elections in the near future are not a given.
GREECE: The Eurogroup is scheduled to convene later today to take stock of the progress made so far towards successful conclusion of Greece’s 2nd programme review. In addition, the ESM is expected to submit short-term debt relief measures that could start being implemented immediately, as per the relevant decisions taken at the May 24th Eurogroup, subject to the political approval of the euro zone finance ministers, upon completion of the 2nd programme review. According to some press reports, a staff level agreement between the Greek government and official creditors seems to be within reach following deliberations over the weekend. However, some issues are still pending and it remains unclear whether today’s Eurogroup will reach a political agreement in principal on the conditionality underlying the 2nd review.
SOUTH EASTERN EUROPE
BULGARIA: The domestic stock market extended its recent gains last week mostly thanks to positive Q3 corporate earning reports. Meanwhile, both the local and Eurobond markets ended little changed last week as investors stayed on the sidelines amid increased domestic political uncertainty.
SERBIA: The EUR/RSD remained bound within a very tight range of 123.00-123.30 last week. In other news, the government adopted the 2017 budget draft, which envisions a deficit of 1.7% of GDP.
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