After a difficult and turbulent 2018, the Greek stock market has been savoring its best four-month period since 1999, with only four sessions left till the end of April. The benchmark at Athinon Avenue has recorded gains of 26.92 percent since the start of the year, which is the second highest return in the world after the main bourse in China.
The main factor in the impressive course of the Athens Exchange (ATHEX) has been bank stocks, whose index has rallied some 70 percent from the historic lows recorded at end-January. According to stock analysts, while a small price decline would not come as a surprise, bank stocks’ prospects in the long term remain positive.
As Wood & Company said in a recent analysis, Greek banks deserve higher valuations, which is why it has maintained its “buy” recommendation. UBS added that investors’ view of Greece has shifted remarkably and the market is now more positive toward the solutions proposed to reduce Greek banks’ nonperforming exposures, estimating that the chances that these solutions will be implemented have increased.
April is thus set to become the fourth consecutive month of growth for the ATHEX general index, and the conditions are in place for it to remain in positive territory in May. This is because some significant catalysts are anticipated in the coming weeks that will further pique foreign portfolios’ investment interest.
A few days ago UBS upgraded Greece to “overweight” among emerging markets, thanks to the strong rally of its bond prices and the constant waning of pessimism with regard to the country. Besides the fact that this year’s general election is expected to strengthen the country’s prospects, there has also been a wave of positive developments that investors are pleased to hear.
The market is already pricing in a new upgrading of the Greek economy by Standard & Poor’s this coming Friday and by DBRS on May 3. In mid-May a new market foray is expected with the possible issue of a seven-year bond, and the market is also looking forward to the early repayment of part of the International Monetary Fund loans and to further good news for banks, such as the approval of the NPE securitization plans and the upgrading of Eurobank (and possibly National Bank too) in the MSCI indexes.