After flirting with the ominous distinction for much of Monday’s session, the Global X FTSE Greece 20 ETF (NYSEArca: GREK) finally joined the 52-week low club, but in the case of the lone Greece ETF trading in the U.S., its Monday low of $9.65 is lowest intraday print since May 2012. A close below $9.19 would be GREK’s lowest close since then as well.
With GREK down nearly 18% today, it might be tempting to bet that a quick snapback rally is in the offing. After all, the ETF is volatile. GREK’s three-year standard deviation of 48.2% is nearly quadruple that of the MSCI Emerging Markets Index, a relevant comparison because Greece is classified as an emerging market by MSCI.
However, investors looking to do some bottom fishing with GREK might want to exercise some patience because it can take equity markets that endure punishment comparable to what awaits Greece (markets there were closed Monday) a while to bounce back. And by “a while,” that means years.
“From Russia in 1998 to Japan after its real estate bubble and the Great Depression in the U.S., bouncing back has taken years, with no guarantee of success. The Athens Stock Exchange Index is down 85 percent from its 2007 high as the Greek government negotiates with creditors for a bailout,” reports Lu Wang for Bloomberg.
Greece’s ASE Index would need to rise more than six-fold to reclaim its 2007 highs, according to Bloomberg. GREK was not around back then, but the ETF would need to jump more than two and a half times to reclaim its all-time of $24.93 set in March 2014. [Greek Drama Sends ETF Tumbling]
Equity market performances in other financially troubled European nations do not portend positivity for Greek stocks. For example, the OMX Iceland All-Share Index lost 95% from 2007 through 2009 and have shown no signs of being able to all the way back to the 2007 highs.