The Athens Stock Exchange moves closer to the status of developed markets, following the announcement of the FTSE Russell that includes the domestic market in the category to be monitored for upgrading.

It is noted that FTSE Russell is the second rating agency, after S&P DJI, to put the Athens Stock Exchange on a watchlist for imminent transfer to the developed markets category. Yiannos Kontopoulos, CEO of Athens Exchange Group, said among others that "this development comes after 8 years of being in the emerging markets category and confirms the progress that has been made in the critical metrics of both our market and Greek listed companies.  For us, over the last two years, the return of the Athens Exchange to the developed markets has been our central strategic objective, for which we have been working systematically and in a coordinated manner". The HH General Index has rallied about 53% since the beginning of 2023, and last year, Greece regained the investment grade rating it had lost in 2010, when the debt crisis began.

INVESTORS RETURNING

Investors are returning to Greek assets as the country climbs out of the deep financial hole it fell into after the global financial crisis, according to a Bloomberg report.  The upgrade in developed markets will bring significant inflows from passive funds in a market that has been starved of liquidity for 15 years, George Lagarias, chief economist at Mazars, told Bloomberg. As hedge funds have positions in many large Greek companies, the upgrade will allow them to sell at good valuations to allow long-term players to enter the market, creating a virtuous cycle. The Greek economy is expected to grow by 2% this year, according to International Monetary Fund forecasts. This is more than double the pace expected in the euro area. CHANGE OF PAGE "This is a positive move that attests to the change of page in the market. At the same time, it seems that more long-term funds and quality investors are expected to enter through the potential upgrade of the SA. Something that will lead to a rise in the General Index," Dimitris Giokas, CFA economist, tells BnB Daily.

CONCERN 

However, some other stock market analysts we spoke to expressed concern about the upgrading of the CEA. They said that Greek stocks are more attractive and stand out in the category that the HA is now in, while the same may not be true if it is upgraded to a developed market.  Dimitris Tzanas, investment advisor at Cyclos, said in a statement to BnB Daily that "the upgrade to surveillance status for the developed market is a positive event. Some might counter that while equities will be on the radar of more funds, they will overtake them. That is, that they will not be as attractive as they are now in emerging markets." He stresses that "the problem is the domestic market. We need institutional investors, private investors, and, of course, the government to engage with the stock market in order for it to gain depth. Now we are a shallow market where foreign investors set the tone."