By Tariro Mzezewa and Ross Kerber
(Reuters) - U.S. investors expect Greek citizens to back a cash-for-reforms deal proposed by the nation's creditors in a July 5 referendum, according to a Reuters poll conducted this week.
Reuters spoke to large U.S. money managers across several asset classes, and 15 of 21 said they expected Greek voters to answer yes to a question whether Athens should accept the proposal submitted by the European Commission, the European Central Bank and the International Monetary Fund on June 25.
"The Greek people must be very scared at this stage," said David Kelly, chief global strategist at JPMorgan (NYSE:JPM) Funds, which manages $800 billion in assets. "Things will get increasingly dire in Greece as the week goes on and if the Greek people vote 'no,' it will be a somewhat catastrophic situation."
Not one investor interviewed believed the Greeks would reject the proposal, even though polling in Greece currently suggests that may well happen. Polls suggest citizens there oppose the bailout, though a breakdown of results shows that the gap has narrowed since the banks closed and capital controls were imposed.
"The arguments in favor of a 'yes' vote grow every minute the ATM machines don't dispense money," said David Kotok, chief investment officer at Cumberland Advisors in Sarasota, Florida.
At 6 p.m. ET Tuesday, Greece missed the deadline for a 1.6 million euro ($1.8 billion) payment to the IMF, making it the first developed country to do so.
A "yes" vote, investors said, may quell the ructions in markets that have emerged as the crisis has come to a head in the last week and as the possibility of Greece leaving the euro zone, or a "Grexit," has increased.
Although the markets may find stability in the result of a "yes" vote or be minimally affected, it will force all parties back to the drawing table and further lengthen the process of reaching a deal.
"A 'yes' vote will eliminate some instability, but we have to expect it will initiate a long process of further negotiation," said Alan Gayle, senior investment strategist and director of asset allocation at Ridgeworth Investments in Atlanta, which has $50 billion in assets under management.
Six investors interviewed were either not sure or did not say whether they thought the vote would pass. Most believed the reaction in markets worldwide would be contained, because of years of efforts by banks and funds to reduce exposure to Greece and the monetary stimulus efforts undertaken by the European Central Bank.
"I think the markets are indicating that whatever happens, the rest of the world will not be greatly adversely affected by the decision," said Margie Patel, managing director and senior portfolio manager at Wells Capital Management, which has $351 billion in assets under management.
A "yes" vote has the potential to end Prime Minister Alexis Tsipras' time in office, according to investors. The prime minister, who is against some terms of the proposed austerity measures, has urged citizens to vote against the bailout, even as he continued to negotiate for better terms.
The looming possibility of a "no" vote for some stands as a buying opportunity.
"There's certainly going to be volatility and that would be the time to add to European equities," said Audrey Kaplan, head of the international equity team at Federated Investors, which has about $4 billion under management and is overweight European stocks.
"The (quantitative easing) plan is nothing short of spectacular for European investments and Greece is not big enough to derail the growth."