They greeted him with an impressive rally of relief. Greek Stock Exchange And bond market V election resulton the now strong prospect of a self-sufficient and functional government in Greece with a four-year perspective and with an agenda to support investment and reform, which will ensure the continuation of prudent fiscal policy, the reduction of Greek debt and a recovery – perhaps faster than expected – investment grade.

Athens Stock Exchange registered an “explosive” growth of 6% to the highest level since July 2014, led by a rally bank shares (+12.5%) and with trading activity exceeding 360 million euros. Greek 10-year bond yields fell 5% to a six-month low of 3.86%, widening the gap with Italian bonds (4.3%) and approaching the levels of Portugal (3.3%) and Spain (3.5%). falling to 140 basis points and to a 2-year low.

Rating agencies, investment houses and brokerage firms have welcomed the strong signal from the ballot box about the country’s outlook, which has greatly reduced political uncertainty. In his comment, Moody’s senior vice president Stephen Duke emphasized that the result is positive for Greece’s credit rating, thus sending a clear signal for an upgrade in the near future.

“The results of the first round significantly raise the likelihood of a new term for New Democracy, which will indicate continuity in fiscal and economic policy, which is a positive factor for Greece,” he notes. In particular, as he explains, “the continued focus on improving the business environment and the health of the banking sector, coupled with the implementation of milestones and reforms in the context of National recovery plansupport economic growth.

Combined with a commitment to fiscal adjustment and higher primary surpluses, this improves the prospects for further significant reductions in Greece’s public debt burden,” said Mr. Duke. All of the above for investment houses, in general, are catalysts that will support the outlook for Greek stocks and bonds. “These results are positive and will support the Athens Stock Exchange as market-friendly New Democracy he is expected to receive a clear four-year term in the second round,” Wood economists Raffaella Tenconi and Alessio Chiesa emphasize. They estimate that Greece’s growth will reach 3.5% this year and 4.2% in 2024, while the debt-to-GDP ratio will fall to 154% this year, from about 170% in 2022 to 145% in 2024. .

The strong message that the ballot box conveys greatly reduces the political uncertainty factor.

Growth of more than 3% in 2023 thanks to higher investment, exports and a record tourist season is also expected in Optima Bank, confirming its positive attitude towards Greek stocks. In particular, as he emphasizes, in the light of the elections and the resounding victory of the ruling party, paving the way for the formation of a government in repeat elections on 25 Juneaccelerated pro-market reforms under the second New Democracy administration are expected to ensure: a) a positive GDP growth trajectory, b) further de-escalation of public debt in relative terms, and c) recovery of investment grade, possibly in the second half of 2023. The above is expected to give a boost to Greek equities, paving the way for the return of the Greek stock market to the developed market category.

Eurobank Equities also expects a significant increase in the value of Greek stocks, as a clear and “resounding” victory for the “New Democracy” will remove the last obstacle facing them, that is, the uncertainty that the electoral process has led to. “run” further. The brokerage expects a sharp rise in the value of Greek assets in the coming weeks as investors prepare for the impressive history of Greece in the coming years and the strong weapons of the Greek economy, such as GDP growth of 2%-3%. , the attractive features of public debt and hence bonds, and the cheap valuation of Greek stocks.

According to the results of the first round, in the second round N.D. he is expected to end up with more than 170 seats, which would provide a comfortable absolute majority, according to the brokerage, and “so, from the market’s point of view, this is the best scenario to ensure policy continuity, reform implementation and fiscal prudence. while leaving room for an upgrade of the country to investment grade sooner than the market expects, with the next catalyst being Fitch’s June 9 rating.”