Market psychology has changed completely with regard to Greece since the May 26 European polls and the announcement of early general elections, as investors look forward to the prospect of a faster political shift toward a more market-friendly administration. They also see a reduction of the risks that had stemmed from what was to be a protracted pre-election period with the possibility of even more handouts that could threaten the country’s fiscal course.
Greek securities are showing clear signs of moving independently from the international climate, with stocks gaining ground and bond yields dropping to all-time lows.
As Danske Bank chief analyst Jens Peter Sorensen tells Kathimerini, investors discern opportunities in Greek bonds that appear very attractive. Greece’s course is now similar to that of Portugal, which has seen its credit rating upgraded, an increase in demand for its assets and an overall improvement in its economy. Greece, says Sorensen, has entered the virtuous cycle that helped Ireland, Portugal and Spain recover.
The bourse and bond price rally has already been impressive, but analysts expect a further improvement. Goldman Sachs argued that a new government under New Democracy would have a positive effect on market confidence and lead to the reduction of state bond yields and more favorable financial conditions, which would, in turn, spur growth.