The autonomous course of the Stock Exchange and the great expectations for the continuation

Of Eleftheria Kourtali

Intense mobility, rise against the cautious climate of international markets, increased turnover despite the usual sluggishness around the Easter holidays, clearly active participation of foreign portfolios, rally in selected blue chips and bank shares, which already beat the European ones by a large margin in performance. This is the image of the Athens Stock Exchange in recent days, which cultivates expectations for flirting very soon with 1,000 units and capitalization – finally – of the Greek strong story, despite the effects of the pandemic and the inflationary shock that the war has intensified in Ukraine.

Strong performance

The General Index has secured, as things stand, the difficult fort of 900 units and is moving steadily to cover the ground it lost due to the war, when it was moving above 950 units and at highs of seven years and above.

From the lows of March 8 and the 789 points, the ATHEX has recorded an impressive rally of over 18%, while since the beginning of the year it has recorded profits close to 5% and is high on the list of the best performers in Europe, and the banking is at + 16%. Specifically, according to the data, until Wednesday, after the rally of 35% recorded by the Turkish BIST 100, only the Portuguese PSI 20, with gains of 10% since the beginning of the year, exceeds X in odds. A. It is followed by the British FTSE 100 with a rise of 3.4% and the Spanish IBEX 35 with gains of 1%.

From there on, all European indices and Wall Street indices are moving in the “red” in relation to the beginning of the year, and so the ATHEX. clearly stands out even at the international level, reminiscent of days of 2019, before the coronavirus, that is, when the ATHEX. recorded profits of 50% on an annual basis and was in the first place of returns internationally.

At the same time, Greek banks significantly outperformed the pan-European banking index Stoxx 600 Banks, which recorded losses of 4.2% since the beginning of the year, while, as noted by Axia Research, the National Bank (+ 34%) is the best performing banking stock in Europe this year.

Meanwhile, the barrage of positive reports on Greek stocks continues, with international companies emphasizing their attractiveness.

As Jefferies noted in a new report, stating that it is absolutely optimistic about the prospects of the Greek economy and the Greek shares, Greece may not have escaped the risk created by the recent shocks, that of the pandemic and that of the war in Ukraine, but it is healthy and significant progress and has significant weapons. According to the house, Greek shares have attractive valuation indices, with the ATHEX. to trade with estimated price index for 12-month P / E profits at 10.8x, price index for book value P / BV at 0.93x, price index for profit growth at 0.39x, dividend yield at 3.7% and own yield capital 8.9%.

The champions of the odds

At the same time, there are many shares of the General Index which have exceeded the market returns since the beginning of 2022 and record, in fact, double-digit growth rates, despite the intense volatility and turmoil caused by the Russian invasion of Ukraine at the end of February.

In the first place of the returns, with a rally over 50%, is the share of European Loyalty, followed by + 41% Epsilon Net, at + 34% the National Bank, at + 32% TERNA Energy, which last week was at historically high levels, at + 29.7% Kekrops, at + 23.5% Papoutsanis, at + 22.9% Jumbo, at + 22.7% ELPE, at + 19.8% Intrakat , at + 18.8% Mytilineos, which also recorded a new record high, at + 17% Eurobank, which is in 8th place in Europe in terms of returns in the banking sector, at + 15.4% Byte, at + 15.4% also OPAP, at + 13.6% Aegean, at + 11.8% Cenergy, at + 11.6% Ellactor, at + 11.3% Profile and at +10, 7% the ΟΛΘ.

As Manos Hatzidakis of Beta Securities notes, so far April fully justifies its reputation as an up-and-coming “all-weather” month. The Greek market not only turned positive from the beginning of the year, but outperformed other Western stock markets, showing a defensive stance even in days of pressure on European markets. The external mix of young people can be considered anything but supportive, with inflation figures bringing interest rate hikes earlier by central banks, while the war front shows no signs of easing, keeping energy costs high.

“But it seems that the Greek market has managed to convince a new audience of investors, many of them entered last year ‘s capital increases, with a different perspective and certainly stronger hands, drastically changing the behavior of the market,” he said. To this, he adds, has contributed the satisfactory valuation of last year in profitability (3.3 billion euros) and increased dividends (1.7 billion euros so far), strong mobility on the front of acquisitions and mergers, but and the expectation of an increase in the weighting of Greek shares in indices aimed at investors of significant specific weight.

The General Index will try to take advantage of the upward momentum of April, in order to close the falling “price gap” between 940 and 949 points on February 24, the day on which the hostilities in Ukraine began, estimates Petros Steriotis, a certified financial analyst. As he adds, the next issues of ODDIH will have to meet the requirements of the international bond market and while the yield of the Greek ten is on the verge of psychologically critical 3%, with the credit rating of the country by S&P to be expected with particular interest.

Upgrades and in the background the investment grade

To the catalysts that can give even more breath to the ATHEX. analysts place the upgrade of Greece by the rating agencies. S&P has already upgraded the Greek economy on Good Friday, while Fitch’s decision is expected on July 8, the double verdict by Moody’s and DBRS on September 16, the third Fitch rating on October 7 and the last one for the year of S&P on October 21.

Foreign companies estimate that, despite the fact that the growth of the Greek economy, as well as all economies internationally and especially in Europe, will be lower due to the effects of the war in Ukraine, the upward trend of Greece’s ratings will not be derailed, with the investment level being fully feasible within 2023. “Growth in Greece may reach 3% this year, 0.3% lower than we expected before the invasion, while in 2023 it will move to 5.4%. However, Greece’s return to the investment grade is not expected to be derailed, as the war in Ukraine is not a temperamental shock for the country “, notes Oxford Economics, while a few days ago DZ Bank noted that the goal for recovering the investment grade next year is absolutely realistic, as the country has taken important steps in this direction.

Lower economic growth Although Greece’s recovery is still expected to continue in 2022-2023, wider twin deficits and the temporary cessation of a declining general government debt trajectory are challenges for Greece’s credit ratings. for its part, Scope Ratings. They undermine to some extent drivers such as the improvement of the debt sustainability prospects and / or the improvement of the external sector, which could support a more favorable evaluation perspective of the Greek State or the evaluation level. However, according to the house, credit ratings and the trajectory of Greece’s rating continue to be supported by EU measures, such as the ECB “weapon”, which is likely to intervene through PEPP if Greek yields increase too high.

The “gift” of MSCI

The good news from MSCI is also an important catalyst for the ATHEX. As noted by Depolas Investment Services, the banking index maintains price levels, as the prevailing estimate is that the National Bank will enter the MSCI Standard Greece index this time.

Today the MSCI Greece Standard Index includes six stocks: OTE, OPAP, PPC, Alpha Bank, Eurobank Holdings and Jumbo. It is noted that about a year ago the Greek participations were only three, OTE, OPAP and Jumbo. Eurobank joined the indexes in May 2021, while Alpha Bank followed in July, after the completion of the share capital increase. Ethniki together with Alpha and Eurobank were deleted from the MSCI Greece Standard index in May 2020.

However, Société Générale continues to estimate that during the restructuring of MSCI indices on May 12, there is a possibility of adding the EIB due to an increase in its capitalization, with possible inflows of $ 102 million. , due to capitalization, with outflows estimated at $ 81 million.

According to market estimates, it is not unlikely that Mytilineos will be listed, however, as its market capitalization after this week’s rally exceeded 2.5 billion euros, while it received a significant vote of confidence from Fitch. The house confirmed a few days ago the “BB” credit rating, with stable outlook, which, as he stressed, reflects the forecasts for a strong increase in EBITDA in 2022-2023, combined with the possibilities of reducing borrowing and strong liquidity.
The increase in the number of Greek shares in the MSCI indices will certainly be an important development for the Athens Stock Exchange, strengthening the already “revived” trading activity, but also attracting more investors.

As pointed out by Dimitris Tzanas, investment director of Kyklos Securities, the Greek Stock Exchange continues to move with differentiated behavior (contrarian) in relation to international markets. Although all the disruptive factors (war, pandemic, inflation, etc.) burden the development prospects of the Greek economy, international companies continue to give a vote of confidence in our country. At the same time, the prospect of European and American tourist arrivals is expected to be reflected in a significant increase in travel receipts, a development that will decisively help GDP.

With these data, as the analyst estimates, it is necessary to exceed the limit of 944 points in the General Index in order to approach the high performance of 971.09 points recorded on February 11, shortly before the start of the war in Ukraine. Such a scenario can take place if the ATHEX. continue its autonomous movement, anticipating a positive outcome in two areas: first, in the S&P verdict to the extent that there is an upgrade to “BB +”, ie one step lower than the one that constitutes the coveted investment stage. Second, the increase in the number of shares included in the MSCI Standard Greece index. However, regardless of the outcome of the factors that will shape the short-term movements of the indices on the ATHEX, the fundamentals of the companies (10 times profit, explosion of money distributions for 2021) document the prospect for medium-term upward movement of the Greek Stock Exchange.