This year has been a milestone for the local securities’ markets, with the Athens Stock Exchange and Greek government bonds recording among the best performances in the world, to the surprise of even the most optimistic observers.
With annual gains of 47 percent, Athinon Avenue finds itself this year at the top of bourse yields internationally, a spot it has conquered and maintained since May, erasing the negative picture of 2018 when Greek stocks took a protracted battering. Leading this impressive recovery has been the banks sector, whose index has grown by over 100 percent since the start of the year.
Analysts say that the market’s awakening after the year’s first quarter is to a great extent due to expectations from the change in government, the improvement of the country’s financial prospects, the acceleration of Greece’s credit rating upgrades and the gradual adoption of the theory that the bank sector will take ever bolder steps toward returning to normalcy.
The positive momentum was further strengthened when bank managers stepped up effort to relieve their financial reports from bad loans, and the new government proceeded with the “Hercules” asset protection scheme that had come to halt under the previous administration. Concerns about the capital adequacy of banks, which had sank their stock prices in 2018, vanished quickly.
In the course of 2019 over 15.5 billion euros have been added to the total capitalization of the Greek stock market, which currently comes to 60.5 billion, from 44.9 billion euros on December 31, 2018.
Analysts remain optimistic about next year too: Greek enterprises are tapping the markets reducing their cost of borrowing, following the footsteps of the Greek state; capital controls have now been fully lifted; and banks are speeding up their bad loan securitizations and are expected to hit the markets again through Tier 2 titled, a process started in the summer by National and Piraeus.
Wealth Financial Services analyst Nikos Sakarelis tells Kathimerini that after an impressive rally this year the Greek market has raised expectations considerably for 2020. Notably, several non-banking blue chips have claimed five- or 10-year highs, if one adds the dividends distributed, and this category of stocks should show an increase in profits if it is to justify the demanding valuation formed, he warns.