Tomorrow, Greece will begin a long process to elect a president after incumbent Prime Minister, Antonis Samaras, called a snap presidential election, two months earlier than had been planned.
The aim is to get his bailout-friendly favoured candidate, a former European Commission man called Stavros Dimas elected as a proxy vote of confidence in his own government.
Over the course of around two weeks and through various ballot stages a winner will emerge once one candidate has amassed 200 or more of the 300 parliamentary votes.
Markets are nervous about the result in itself, and also because calling an early presidential election is being seen by some as the forerunner to an early general election which polls indicate could be won by the radical anti-bailout, anti-EU party Syriza, rather than the ECB-friendly New Democracy.
Such a sequence of events would be the last thing Mario Draghi and most European equities investors would need heading into a crucial and possibly decisive year for the near term economic prospects of the continent and the continued viability its single currency zone.
Next year is supposed to be the year that Draghi fires the long awaited big bazooka of all-out quantitative easing which propels the Eurozone back to healthy growth- or at least sends its equities markets upwards.
The practical aspects of that are already complex and somewhat tenuous given there are numerous different sovereign debt issuers within the block rather than a single government as with other QE programmes.
The plan could be given a fatal blow before it gets off the starting line should Syriza gain power early next year and put Greece on course for an messy exit from the single currency and default on its vast debt.
In 40 years never has the ruling party’s candidate failed to be elected, requiring a 3/5th share of the vote,” said Ben Gutteridge, head of fund research at Brewin Dolphin.
“Such is the fractious makeup of the Greek parliament however, that there is a very real chance that after the maximum permitted three attempts, New Democracy do not get their man. Should such an outcome transpire a general election must be called,” he said.
“New Democracy shout loudly about Syriza’s aspiration to leave the euro project, default on their debts and rip up the bailout agreement, and is creating a heightened level of nervousness in markets that is sure to remain throughout electoral proceedings,” Gutteridge added.
One comfort to those holding big European equities overweights according to Gutteridge however is that Syriza has been making more conciliatory noises about the EU and the bailout recently.
It could easily be argued however that this is just because they now have a sniff of gaining power and want to maximise their appeal to the middle ground, rather than being a sincere softening of their position.
In any case, investors may be well advised to break away from the eating, drinking and being merry between Christmas and New Year to check on how the votes are stacking up in Greece.
