A.A. is at the top of global yields, hovering around a nine-year high, indicating that significant capital is gradually flowing into Greece.

At the close of Thursday (1202.43 points), the general price index recorded the highest increase (+29.32%) among the world’s major indices, followed by the Russian index (+23.02%), Nasdaq (+21.32%) . The Greek stock market is more than doubling the major European stock markets (DAX +13.43%, CAC +11.67%).

The market has “taken” the election results as the best possible scenario, as it reduces political risk, paving the way for an investment grade recovery in the coming months.

Morgan Stanley anticipates the emergence of investment grade and explains that stock markets outperformed the emerging markets index by 22% in about eight months prior to being upgraded to investment grade.

It was not only an explosive growth of 6.09% the day after the election, but also an explosion of transactions, which shows that significant funds are flowing to Greece. Some of this, of course, has been done gradually over the previous months, as new “players” come to AX due to the recovery of investment grade.

Eurobank Equities notes that with the electoral cycle hurdle passed, a significant revaluation of Greek assets is expected as investors tune in to Greece’s impressive history in the coming years and the powerful weapons of the Greek economy, such as a 2-3% increase in GDP, attractive public debt characteristics and, hence bonds as well as a cheap valuation of Greek stocks. Eurobank Equities is recommending that investors move into a position of risk protection by moving their portfolio to banks, PPC, OPAP and Mitilineos.

Axia emphasizes that the political risk for Greece is misplaced. The above should lead to a very positive reaction from the Greek stock market, based on expectations of continued structural reforms and policies from a market-friendly government, coupled with a strong economic outlook and relatively weak valuations. According to Axia, the political risk in Greece is very low (lower than in most countries of the world).

Axia believes that PPC, HelleniQ Energy and Ethniki will benefit from political clarity, construction/infrastructure companies and EYDAP will benefit from continued tendering and regulatory processes, and banks, highly liquid stocks (OTE, Mytilineos, Jumbo and Motor Oil) will react very positively. to the prospect of restoring investment grade as well as HEXA.

Optima Bank notes that in light of the elections and the resounding victory of the ruling party, paving the way for the formation of a government in a repeat election, the second administration of New Democracy is expected to accelerate market reforms. to ensure: a) a positive GDP growth trajectory, b) further de-escalation of public debt in relative terms, and c) recovery to investment grade, possibly in the second half of 2023. Bank, the stocks that will run the most after the voting results are PPC, Mytilineos, Motor Oil, ELPE, Terna Energy, GEK TERNA, Intrakat, Ellactor banks.

Rating agencies

Political continuity and reforms have been revealed by polls by S&P Global Ratings, which will assess the Greek economy on October 20. A strong New Democracy majority could lead to an increase in Greece’s credit rating, according to DBRS estimates, after the elections. According to the three agencies S&P, DBRS and Fitch, the country is one step below investment grade. The exception is Moody’s, which is still 3 points behind Greece. The Greek economy is one step closer to the cherished investment level following the May 21 elections.

Investors are discounting the earlier-than-expected recovery of Greece’s investment grade as the next rating will be released by Fitch on June 9th.

The strong percentage received by the New Democracy significantly increases the likelihood of a re-formation of the government, Moody’s notes. This means that fiscal and economic policies will be consistent and this will have a positive impact on Greece’s creditworthiness (credit positive).

Moody’s predicts that Greece will experience one of the largest debt reductions in the world, with general government debt falling below 150% of GDP in 2025 from 171.3% in 2022 on the prospect of much higher nominal GDP growth in the coming years.

Bonds

And the bond market has been especially positive about the results of the nationwide elections, as they signal political stability and continued reform. After all, investment houses took on a pre-election commitment that under these conditions, after the elections, they will begin to raise the country’s credit rating to investment grade. Even lower than the yield on the corresponding British 10-year bond other than Italy’s, the Greek bond fell earlier in the week and Greece’s goal is now to match Spain and Portugal’s borrowing levels.

Greek stocks are cheap

Morgan Stanley considers the Greek market the best choice among the emerging markets in Europe. Greek stock valuations remain low, according to Morgan Stanley. The domestic market trades at a P/E ratio of 7.7x over the next twelve months, below the long-term average. The dividend yield ratio has retreated from its recent high to 4.9% and remains above average. The ratio of P/BV to book value is higher than in the past, which is fully justified by the improving market conditions and earnings dynamics.

The results announced by the listed companies justify the higher estimates.

The 1st quarter of the year was strong for Greek banks, exceeding the average estimate of analysts. In addition, liquidity positions remained strong and NPE organic formation remained negative. Capital dynamics also improved.

Quarterly net income was $787 million and net interest income was the main driver of the increase in interest income from loans and bonds. Net interest income increased 10% quarter-on-quarter to $1.87 billion.

Technical picture of the market

The result of the election was ideal for propping up the market and bringing in new money to keep the movement going.

The upward movement of the market began from the end of September last year, while the main stock index recorded an increase of more than 50%, showing no strong signs of fatigue.

From a technical point of view, the especially strong resistance of 1150 units, which has been observed since 2014, is especially positive.

In the broader technical picture, upside potential comes from a break of 910 units, with the 1400 zone being the first medium-term main target.

1200 units is now the starting point for the next General Index meetings and an upward chart target of 1380-1400 units.

2013 returns

The largest gain since the beginning of the year was registered in shares: MIG +213.80%, Piraeus +96.11%, Klukinas-Lappas +92.19% and Cenergy +79.80%.

On the contrary, the largest decline was recorded in stocks: Frigoglass -39.18%, Mermeren -28.14%, Akritas -20.34% and Myloi Kepenou -17.32%.

Due to the high capitalization, the shares recorded growth: Piraeus +96.11%, Aegean Airlines +76.56%, Ethniki +58.53%, Mytilineos +42.86%, PPC +42.79%, Eurobank +42.18%, Autohellas +38.80%, Jumbo +37.55%. , Viohalco +37.08%, Alpha Bank +36.00%, Titan +33.33%, Ellaktor +26.86%, GEK TERNA +25.69%, PPA +23.67%, Quest Holdings +22, 51%, OPAP +21.69% and Coca Cola HBC + 21.68%. Shares followed: Sarantis +12.63%, Elvalhalcor +8.27%, Lamda Development +4.62%, Motor Oil +2.02% and ELPE +0.40%.

On the contrary, the following securities fell in price: OTE -3.43%, EYDAP -1.91%, Terna Energy -0.79%.

Source: RES-IPE