Thanks to Grecology for the inspiration. If you're not already following Marcus, you should be. He offers up some of the best Greek macro commentary around.
The Greek stock market has been remarkably impressive, reaching its highest level in 9 years. It currently ranks as the world's 3rd best performing market this year, following its position as Europe's top performer last year. While certain indicators remain below previous peaks, some notable improvements have been observed.
Performance
The Athens General Index has soared by 39% in the first half of this year, marking one of its best performance stretches in history. However, historical data suggests that it may experience a partial retracement. Although the index has recovered from the 2014-2015 drop during the SYRIZA government tenure, it remains significantly below its peak (-68%) during the 2007-2008 financial crisis. Despite its mixed long-term chart, Greece has experienced very strong equity market performance over 1/2/3/5 year periods.
Market Breadth: Strong But Concentrated
Market breadth analysis reveals that out of the 60 stocks in the General Index, 58 have shown positive performance this year, indicating robust support. However, less than half (42%) of the stocks have gains greater than that of the index, suggesting a slight concentration of performance. To sustain the stock market rally, an improvement in market breadth is desirable. Banks and industrial stocks, particularly Piraeus Financial and Aegean Airlines, have been the best performers and key contributors to the Greek market's success this year.
Fund Flows: Taking Profits
Exchange-traded funds (ETFs) like GREK, the Global X Greece ETF, offer investors a simple, cost-effective means to gain broad exposure to Greek stocks. Fund flows in and out ETFs provide insights into investor sentiment. Following the results of the second round of elections on June 25th, investors have started redeeming profits from the ETF, which has proven to be a highly profitable trade this year. This also indicates that investors feel performance may not be as strong in the second half of the year.
Trading Turnover: Improving But More Activity Needed
The Greek capital markets have faced liquidity challenges, but trading activity on the Athens Exchange has shown improvement this year, with turnover in some months exceeding 2.5 billion euros, a level not seen since 2015. The hope is that future upgrades in bond ratings and an eventual Developed Market upgrade for Greek equities will generate more interest, trading activity, and flows.
Analyst Price Targets: Bullish On Banks
Greek bank stocks receive extensive coverage from stock analysts, with Goldman Sachs and JPMorgan recently reaffirming their positive outlook. Overall, most analysts are bullish on Greek banks, as evidenced by the majority of buy ratings. The average consensus price targets for banks also indicates further potential upside.
Thank you very much for the shoutout! Really good temperature check on the Athens index!
great take, thank you!