Australian fund managers may be on the other side of the world from the drama unfolding in Europe, but local wealth managers are nonetheless feeling the impact from the region's debt crisis.

Mounting expectations that Greece may be forced to leave the eurozone have already seen gains for the year wiped off global share markets. Australia's benchmark S&P/ASX 200 Index itself has lost about 7% so far this month, while London's FTSE 100 has slumped by close to 6%.

Commonwealth Bank of Australia analyst Ross Curran said he expects this downturn in global bourses to eat into local wealth managers' profits as far out as fiscal 2014.

On Thursday, the strategist downgraded his earnings-per-share estimates on six major fund managers--including a cut to his forecast for Perpetual Ltd. (PPT.AU) in fiscal 2013 by 13%, and for AMP Ltd. (AMP.AU) by 1.9%.

Curran also reduced his forecast for London-based Henderson Group (HGG.AU) by 8% in the last quarter of the current financial year, and by 9.8% next fiscal year due to share-market "weakness."

Shane Oliver, Head of Investment Strategy at AMP Capital--a subsidiary of AMP--which manages more than A$124 billion, has said the indirect impact of a Greek default could be similar to the collapse of investment bank Lehman Brothers at the start of the financial crisis in 2008.

AMP Capital has about a fifth of its funds invested in international equities, of which around 15% is in Europe, he said.

"It's a bit like in 2008," said Oliver, who is based in Sydney. "Our exposure to Lehman's was non-existent but you're still affected by the impact on share markets and debt markets."

Talk of Greece exiting the common currency has surfaced this past year, but concern has intensified after the country's May 6 election failed to produce a coalition government.

One worry is that the winner of a scheduled June 17 poll will reject spending cuts designed by European leaders to keep Greece in the euro.

Fund managers worldwide have been working to reduce their exposure to Europe since about last summer as concern over Europe's sovereign debt crisis escalated.

Sydney-based senior portfolio manager of fixed income at Perpetual, Greg Stock, said the fund currently has an "immaterial" exposure to Europe--holding only the senior debt of some large regional banks and no sovereign bonds.

While he said he expects the euro to "be there for some time," even with a Greek default, most of Perpetual's euro exposure is hedged back into Australian dollars to reduce the exposure of any volatility in the European currency.

Australia's A$77 billion Future Fund had A$4.32 billion, or 5.77% of its total equity and debt program, invested in Europe as of February 14, according to data supplied to the country's parliament. Of that, less than 0.4% was in Europe's most troubled countries--Greece, Portugal, Spain, Ireland and Italy.

-By Caroline Henshaw, Dow Jones Newswires; +61-2-8272-4689; caroline.henshaw@dowjones.com

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