Modernizing the Athens Stock Exchange should be a national goal along with restoring investment grade. In addition, the second is a condition of the first, since the change of “track” for A.A. experiencing a change in the course of the economy.

Efforts on the part of the stock exchange group to restore developed market status from the emerging market category to which it currently sits and to which it was downgraded in 2013 and 2015 by (index providers) MSCI and FTSE, due to the debt crisis, in have accelerated lately. Guide A.A. is in constant contact with the houses to properly convey the image and appreciation of the Greek market, with the first major test expected in April and the second in September. These are the dates when MSCI and FTSE will assess whether the Greek stock market qualifies for an upgrade, and in June (MSCI) and September (FTSE) they will announce their decisions.

It is estimated that since Greece is expected to regain its investment rating by the end of 2023, an upgrade to the AA rating is possible during 2024. In addition, it is a key element of the National Strategy for the Development of the Greek Capital Market, which was presented at the relevant event last week.

While significant progress has been made in restoring this milestone, there are still several challenges and unresolved issues. The fact that over the past 25 years only three markets have managed to transition from emerging to developed—Greece in 2001, Israel in 2010 and Portugal in 1997—shows the difficulty of achieving this goal.

As Konstantinos Aifanthopoulos, Portfolio Manager at Iolcus Investments, emphasized during the presentation of the national capital market strengthening strategy, “The Greek government, in cooperation with AXA, should strive to modernize developed markets along with the existing investment grade target. recovery’. This development has important benefits, such as improving A.A.’s “reputation”. and Greece internationally, increased cross-border investment, reduced market volatility and higher share prices, which means a lower cost of capital for Greek listed companies.

Since Greece is expected to regain its investment rating by the end of 2023, an upgrade to the AA rating is possible during 2024.

The houses set some criteria for a market to fall into this top category, and Greece still has some boxes to check in this context.

The first criterion concerns the sustainability of the country’s economic development: per capita gross national income must be 25% above the World Bank threshold for high-income countries ($13,000) for three consecutive years. Greece satisfies this criterion.

The second criterion relates to the accessibility of the market: it must be open to foreign ownership, the ease of capital inflow, the efficiency of the operating structure, the availability of investment instruments and the stability of the institutional structure must be ensured. Greece still has work to do, especially in the operational context of equity lending and short selling.

The last but very important criterion is that the market meets certain size and liquidity requirements. In terms of liquidity, the average annual value of a transaction (ATVR index) should be at least 20%, which suits the Greek market.

In terms of size, at least five listed companies must meet the criteria for total capitalization and free float. For example, MSCI estimates them at $4.278 billion and $2.139 billion, respectively. Greece does not meet this quantitative criterion. According to the data provided by Mr. Aifantopoulos, four listed companies meet this requirement, Coca-Cola, OTE, OPAP and Eurobank, while the National Bank comes close to it.

Thus, MSCI must be sure that the renewal will be irreversible and not at the limit, so Greece must exceed the entry requirements.

This can be done by increasing free float, which can be achieved, for example, by deinvesting HFSF from Greek banks, which will “free up” the shares on the market. Also, a landmark introduction such as the one at Athens International Airport, apart from the fact that it will mark the return of A.A. as an attractive investment location, will increase the number of listed companies that meet the size criteria.