The second bailout package has certainly bought more time for Greece to get their indebtedness to a more sustainable level, mid-term. With that decision a disorderly default has been prevented for now. However, the magnitude of the additional necessary and very painful austerity measures will put the already stricken economy in even more trouble.

It remains to be seen if the forced measures by the Trojka will show the necessary positive effects in order to get the financials back on track. As for now, our confidence that Greece will be able to turn around the ship is muted.

In respect to the Asian markets, this step has been already positively priced in within the last weeks. The Eurozone is one of the largest export regions for Asian economies and therefore it is of outmost importance that the demand from this area stays intact. With the measures taken the breakup of the Eurozone has been prevented and will bode well for future terms of trade.

Meanwhile, Japan and China have realized that the Eurozone stands at the abyss and the rescue of troubled economies in the European periphery is necessary to safeguard the important export markets for them.

A sensible way of doing this is by getting involved more in the IMF. For China it is another opportunity to get more positively involved into global affairs. With helping out in Europe as a white knight it can improve its image and, as already pointed out, defend their economic interest. 

In terms of what investors should do regards the ongoing crisis in Europe and inflationary pressures in China, we recommend balancing the portfolio in different dimensions. To hedge against future inflation we still like gold at the levels. In times of uncertainty the yellow metal represents a store of value and is not connected to any paper currency.

With the recent efforts by the Trojka to calm the European turmoils risk assets have witnessed a remarkable rally which was further supported by the unexpected robust development of the US economy. Furthermore, with all the forms of quantitative easing globally, the reflation trade is not over yet.

On the equity side we favour emerging Asia and see catch up potential in Europe. On the fixed income side we like emerging market debt, high yield and corporate bonds whereas we do not see much value left in treasuries.