MSCI index entry to boost Greek stocks

Greece’s leading companies are set for a multi-billion-dollar boost in stock market value as a result of their inclusion in MSCI’s flagship emerging market index, improving their appeal to investors as they struggle in a deep recession.

Ten Greek companies will enter MSCI’s Emerging Markets index on November 27, the index provider said late on Thursday.

The Greek bourse had already been surging in heavy volume as international investors took a fresh look at a country whose debt crisis hammered asset values. MSCI, which has $7 trillion benchmarked against its indices, said National Bank of Greece, Piraeus Bank and Alpha Bank would be the biggest entrants.

Greece is being relegated from the top, developed market index in what might seem like a major setback. But many analysts reckon Greece will benefit hugely from the move, which follows similar action from index providers Russell Indexes and Standard & Poor’s.

FTSE may also follow suit.

“It is in the longer term a much more positive outcome for Greece,” said Ludovic Moreau, global head of portfolio trading strategies at Citi.

Moreau estimates passive, index-tracking funds will pump $500 million into the affected companies, while an additional $350 million could come from semi-passive funds that are allowed to track the index with more magnitude. [Reuters]

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