Pantelakis Securities: Why the Greek Stock Exchange is an ‘exciting’ trade

Her Eleftherias Kourtali

Greece is a different country from the rest, as Pantelakis Securities notes, as it is a unique story of economic growth, the ECB’s support in market financing is important, while the government pursues a stable and market-friendly policy. The ATHEX is therefore ready in a few months to enter the radar of portfolios that invest in countries with investment grade, while it belongs to the circular trades and trade “value” that are the “current” at the moment, while offering exciting valuations.

More analytically, as he points out, the stock market, just at the moment when the world is preparing for the “Great Tightening” of monetary policy, Greece is at a different stage of the economic cycle. It is not just a cyclical recovery from the Covid disaster, with third-quarter GDP already above pre-pandemic levels. Most importantly, the country (reformed after a decade of crisis) is about to embark on a new multi-year growth cycle, with an avalanche of EU capital inflows (€ 82 billion, or 45% of 2019 GDP, by 2027, especially from the NGEU), which will accelerate the recovery and cover the chronic investment deficit.

At the same time, adds Pantelakis Securities, the factors that hitherto threw sand at the wheels of the economy and hindered recovery have now disappeared. Private sector balance sheets have improved significantly, and, most importantly, banks (formerly burdened by the legacy of the NPEs) have now completed the healing process and will play an integral role in leveraging the Recovery Fund inflows.

In addition, through increased flexibility of the PEPP reinvestment program, The ECB has substantially expanded a “put” for Greek funding, while the country is set to achieve the “holy grail” of investment rating early next year, for the first time in more than a decade.

End, there are no political risks: if nothing else, current polls show a similar result to the current status quo, for whenever elections take place by mid-2023.

Exciting valuation

Superficially, as the stock exchange notes, Greece remains a special market and is generally underweight in global portfolios. But if you look deeper, a different picture emerges: the recent stock offers (from Piraeus, Alpha and PPC) were a turning point for the deepening of the market, with many quality institutional names investing in the country for the first time here years. In addition, the recent global shift towards cyclical markets and “value” shares suits Greece, as it better suits its overall profile and structure. Finally, while the market has just recovered to pre-Covid levels, the companies’ profitability is already exceeding them, making the ATHEX valuation. exciting.

The top picks

In this context, Pantlelakis’s positions and recommendations are made through a three-point approach.

First, it is overweight in the banking sector (a major “value” equity sector), with Ethniki and Alpha being its top picks.

Second, it has a preference for undervalued stocks (Jumbo and Lamda Development), where a “myopic” market, in its view, is very pessimistic about future prospects, either for their existing activities or for their new ventures (Greek) .

Finally, in the midst of the turmoil in the energy markets, it seeks increased exposure to shares that will lead to the green transition (PPC, Mytilineos and Terna Energy).