Foreign funds return to the bourse after its balance shift

After three years of abstaining, international funds are once again eyeing the Athens stock market, and as the risk of a Greek exit from the eurozone diminishes, foreign investors are expected to increase their efforts to enter and profit from the local bourse.

Last spring, the Athens bourse had priced in not only a return to the drachma, but also the complete destruction of local banks and the bankruptcy of the country’s top companies that hold the monopoly in their sectors, such as OTE telecom and Public Power Corporation (PPC). The picture is clearly reversed now, with the local market going from strength to strength.

Last month, for the first time since 2009, the local market’s benchmark index ended the year with returns, which amounted to 34 percent on an annual basis, as some 14.5 billion euros were added to the bourse’s capitalization over the course of 2012. It has now risen another 5 percent since December 31, as it closed at 962.19 points last Friday.

In their recent annual reports regarding 2012 accounts and forecasts for 2013, international firms continue to show a preference for shares instead of bonds, as they believe that the margin for growth in bond markets has diminished. The Greek bourse is now firmly on their radar, given its major rebound during 2012, after slumping to below 480 points on June 5 – a 23-year low.

The formation of a coalition government after the June 17 election led not only to a major shift in politics, but also in the stock market. Instead of being completely reliant on banks, the local bourse is now driven more by extrovert companies and those with real fundamental growth.

Hedge fund representatives, who now pay regular visits to Athens, say that the leaders in returns over the first quarter of 2013 will be stocks and high-yield assets, which come with a higher risk.

For instance, hedge funds such as Moore Capital Management have available-for-sale positions in Greek bonds, according to well-informed sources. Moore Capital is a New York-based fund that manages funds of $15 billion. James Caird Asset Management LP, a London-based firm set up in 2008 and run by former Moore Capital trader Tim Leslie, is following a similar policy. James Caird manages funds of more than $3 billion.

Bank officials also say that the shorting of Greek bonds and stocks also involves the well-known Fortress Investment Group. Fortress positions itself in the markets of stocks and bonds, in hedge funds, in private equity capital and in the real estate market.

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