From Martin Lueck and team at UBS:
Too close to call.
Is the election a vote on Greece’s euro membership?
Can Greece be out of the eurozone as early as next week?
Technically yes, but very unlikely.
Will the election remove uncertainty about Greece?
What is the ideal election result – from an investor’s perspective?
There is a two-step answer to this question. First, there is no ideal outcome because in the immediate aftermath of the election, any possible coalition (if there is one) could potentially announce that it may seek to renegotiate the MOU…Second, there could be a development later on, in which inability to form a coalition leads to a caretaker government.
Will they pull the plug?
The question whether the troika, ie, the EU, the ECB and the IMF, will really stop payments in case of a Syriza win and Mr Tsipras’ refusal to comply with the commitments made in the MOU is very hard to answer. To be honest, so little can be said on this that it would be pure speculation to suggest any potential outcome.
Can Greece survive once its primary balance is zero?
We see several problems here. The first is that Greece is not as close to a balanced primary budget as many think.
Would Greece be better off without the euro?
We believe that whatever the election outcome is and no matter if the country remains a euro member or not, Europeans should know that they will likely need to keep paying for Greece.
What if there is another post-election deadlock?
The bottom line is that, in the event of an unclear election result and no government formed by 26 June (ie, in the nine days following the election), there would probably be a national unity/technocrat government, supported by a coalition of major parties, rather than another round of new elections.
What’s the medium-term perspective?
In the medium term, even if this Sunday does not produce a result which ends up in Greece leaving the euro area, there will be a lot of uncertainty about the country’s euro membership.
What’s your conclusion on all this?
We know very little about the likely outcome of this Sunday’s election in Greece. Opinion polls show conflicting results, and can they be trusted at all? There may well have been even more posturing than usual on the part of all parties, especially Syriza and Nea Dimocratia. Voters appear impressed, but may completely change their mind on election day.
The second important conclusion is that, on Monday morning, we will likely still know very little. Even in the rather unlikely event of a straightforward election result, ie, a clear majority for one of the contenders, we would not know what this means for renegotiation of the MOU, which all parties have now announced. There might be even more fog, instead of less, next week.
Lastly, if this election produces an unclear result (which we expect), ends up in some kind of coalition, potentially a technocrat government (which we find likely), but does not produce a Greek exit from the euro area (which is our core scenario), this would not necessarily remove uncertainty around Greece. If anything can be predicted ahead of this election with a reasonable degree of confidence, it is that the Greek tragedy is most likely set to continue.
Much more detail on this in the usual place.