ASE emerges as a top performer
With gains of 40% this year and 65% overall since its rally began in September 2022, the Athens Stock Exchange, at a nine-year high, is one of the top performers internationally.
A big part of the market’s rise is due to banks, whose index has increased 65% since the beginning of the year and 108% in the past 12 months.
The rise has prompted a slew of positive reports from big investment firms that call the ASE the markets’ big comeback story. A risk factor in this story, the national elections, has been eliminated with the result of the double May-June elections which ensures political stability. This, along with a prudent fiscal policy and continued strong growth have significantly reduced, if not eliminated, the so-called country risk.
The stock market performance is also related to the looming recovery of investment grade for Greece’s debt after 13 years. As ratings agency Scope noted, this is a very important achievement, since most countries that default never again approach investment grade.
Regaining investment grade will help the ASE become again a mature market, after being relegated to the emerging markets category in 2013 by MSCI and in March 2016 by FTSE. Analysts, though, believe that the debt upgrade will be more important for the ASE than its own upgrade, which is expected to take place at the end of 2024 or the beginning of 2025, as it will allow investment funds, restricted from investing in emerging markets, to become active. Axia Research has estimated that the value of foreign-held Greek stocks will multiply by 2.3 when the investment grade is finally bestowed.
The number of active accounts trading on the ASE is still low, despite recent new entries: the active accounts are 26,791, with only 862 belonging to foreign individuals or corporations. It is notable that, among funds specializing in emerging markets, 57% have no positions on the ASE.
JPMorgan, the latest to issue a glowing report on the ASE, notes that the stocks still have an upside, despite the long rally. It cites the strengthened Greek banks, the still low exposure of investors to the ASE and the favorable macroeconomic climate with the continuing outperformance of the economy.
