After a strong rally, the stock market is showing signs of fatigue in August. However, foreign financial institutions are renewing their “vote of confidence” in the Greek stock market and in Greek banks.
More specifically, JP Morgan sees a continuation of the Greek stock market rally, due to stable dynamics in banks, attractive valuations and a strong macroeconomic backdrop.
JP Morgan believes that the strong rally of the Athens stock exchange from the beginning of the year (40%) still has a long way to go. Greek stock market valuations are still attractive.
The MSCI Greece index trades at attractive levels compared to the 5-year average and based on P/E (6x) and P/BV (0.7x), with a discount of 49% and 45% compared to emerging markets internationally and compared to the emerging market of Europe, the Middle East and Africa.
Morgan Stanley pointed out that Greece is at the top of its emerging market portfolio and despite its high yield since early 2023 is still considered ‘cheap’.
MSCI Greece is also showing its best performance since the end of October last year and has performed strongly since the beginning of the year while funds investing in emerging markets (GEM) have increased their exposure to Greek banks over the last quarters.
According to Citigroup, the earnings per share of the Greek listed companies is expected to increase by 16% this year, a percentage which remains very high compared to the estimates for developed markets, US and emerging markets.
International, as well as domestic investment houses are particularly bullish on banking stocks and despite the significant rise in the banking index (over 60% since the beginning of 2023) they are proceeding to increase target prices.