According to ancient Greek lore, the phoenix was a long-lived bird that cyclically regenerates itself. This back-from-the-dead feat now appears to be taking root in the Greek economy as well.
You can link the economic pivot to a profound directional shift in the Greek economy. This Saturday will mark the four-year anniversary of an agreement to secure a bailout agreement with Eurozone finance ministers in exchange for very stringent government spending and taxation concessions.
Those moves produced a string of fiscal surpluses and a slew of ancillary benefits. “Household finances, fixed investment and employment have also improved, helping boost growth domestically while stimulating investor interest globally,” Chelsea Rodstrom, a research analyst at Global X funds, said via email.
The Greek economy is expected to grow 2.4 percent in 2019, according to the International Monetary Fund. “This puts Greece in the upper tier of the eurozone growth table,” noted Peter Dohlman, IMF mission chief for Greece, in a March 2019 IMF publication.
Investors have noted the rebound: The Global X MSCI Greece ETF (GREK) has rebounded 39 percent this year, making it one of the top-performing, unleveraged single-country funds of 2019. That may be cold comfort for investors who endured annual losses in excess of 30 percent in 2014, 2015 and 2018.
The GREK fund charges a 0.59 percent expense ratio and has $394 million in assets.
Yet for advisors looking to generate alpha for their clients who can stomach an outsized level of volatility, Greek markets hold the promise of further gains as the phoenix flies higher toward the sun.
While Greece has maintained an impressive level of fiscal discipline under its recent center-left government, many expect the nation to continue with promised reforms thanks to the recent election of Kyriakos Mitsotakis, a Harvard-educated former banker and leader of the center-right New Democracy party.
His key campaign promises include reducing red-tape and taxes for businesses, along with major investment projects to boost its tourism and export-driven sectors, Global X’s Rodstrom said. And she thinks that will help the Greek economy sustain its current momentum.
“Recent events, including last weekend’s elections and yields on Greek sovereign debt falling to record lows, and a recovery in consumer confidence could reflect the start of a virtuous cycle,” Rodstrom said.