Following years of crippling debt and economic struggles, Greece’s stock market is poised to perform better than it has in two decades as investors are drawn in by the potential of newly elected prime minister Kyriakos Mitsotakis and his economic promises.
According to a report by The Wall Street Journal, the Athens Stock Exchange General Index (Athex) is up approximately 33% year-to-date — a rate superior to that of other European countries — which sets it on track for its best annual return since 1999.
The Athex trades with a higher price-earnings ratio than the Stoxx Europe 600 Index — a conglomerate of large, mid and small capitalization companies across 17 European countries.
Greece’s stock market began its rally slightly before the new year as investors expected then New Democracy opposition frontrunner Mitsotakis to win national elections in July.
During Mitsotakis campaign he promised to create new jobs and stimulate the Greek economy via investments — a large factor in his victory over former prime minister Alexis Tsipras in the July 7 elections.
Now, nearly two months into his role as national leader, Mitsotakis is being watched carefully by investors, who are waiting to see if he will follow through on his promises and build upon Greece’s economic momentum.
“There’s been a turning point for investor perception,” Giuseppe di Mino, a managing partner at London-based Amber Capital, told The Wall Street Journal. “It will be very interesting to see what they do, beyond what they say they will do.”
Greece continues to struggle economically and will need a substantial amount of time to rise to previous levels. According to WSJ, the Athex remains down 83% from its 2007 peak and the Greek economy has contracted approximately 25%.
The global financial crisis of 2008 led the Greek economy to plummet along with the rest of the European Union. EU’s responsive monetary policy helped countries such as Germany and France recover, but regulations and austerity measures left Greece with vast debt and in a state of severe economic depression.
Facing sovereign default, Greece’s economy nearly collapsed unilaterally in 2015. The country held on through three multi-billion euro bailouts — which it received from the International Monetary Fund.
Featured image / Louisa Gouliamaki, Agence France-Presse
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