The Athens Exchange grew by €7 billion in the first six sessions of the month as foreign investors, led by some large hedge funds, poured into the market, reports Anestis Dokas for the Greek newspaper Ekathemerini, and the exchange’s main index, the ASE has jumped from 1011 to over 1100 in the same period.
“Hedge funds, vulture funds and private equity funds foresee developments in the local economy that others will not realize until later, with a key factor being government plans for privatizations,” writes Dokas.
Warren Buffett’s 2018 Activist Investment
Hedge funds want to be in the market to take advantage
Dokas points to two factors being especially attractive to foreign investors. First, the Greek privatization authority (TAIPED) may increasing the pace of privatizations, and hedge funds want to be in the market to take advantage of these changes as they happen. Second, eight blue chip Greek companies will become part of the MSCI Emerging Markets Index on November 26, and this could increase the amount of attention they get from investors. National Bank of Greece (NYSE:NBG), OTE, OPAP, Alpha Bank A.E. (OTCMKTS:ALBKY), Public Power Corporation, Jumbo, Hellenic Petroleum, and the Folli Follie group could see their stock prices go up simply due to increased visibility.
Even moving beyond specific events of the next few months, Greek equities are currently quite cheap, and if Greece is able to take part in a wider Eurozone recovery they could see big gains in the next few years. The U.S. hedge fund Paulson & Co, to take just one example, is investing in Greece because they have been impressed by growth in the tourism and export sectors, Reuters reports.
“We think Piraeus and Alpha, two banks we have a position in, are now very well capitalised and poised to recover,” said fund manager John Paulson. “They have good management and we think the Greek economy is improving, which should benefit the banking sector.”
Eurozone’s sovereign debt crises have been swept under the rug
Lots of analysts think the Eurozone’s sovereign debt crises have been swept under the rug and still pose a long-term threat, but it’s clear that the ECB won’t let anyone go under in the short term, and if Greece can build enough momentum it could be enough to turn what looks like a short to medium term opportunity for foreign investors into real sustained growth.