The Global X FTSE Greece 20 ETF (NYSEArca: GREK) tumbled nearly 40% last year, making the lone Greece exchange traded fund the worst-performing single-country ETF tracking a PIIGS economy, but that did not stop investors from piling into the fund.
“Meanwhile, Greece’s troubles haven’t scared all investors away from the Global X FTSE Greece 20 fund. The ETF chalked up $286 million in net inflows in 2015 despite its sharp decline, according to data from etf.com,” reports Gerrard Cowan for the Wall Street Journal.
For five weeks last year, equity markets in Greece were closed making GREK the lone price discovery mechanism for Greek stocks. While the Greek bourse was closed, U.S.-listed GREK traded at double-digit percentage discounts to its net asset value, reflecting investor’s concern with Greece-related assets on the New York Stock Exchange. [While Athens Exchange is Closed, the Greece ETF Show Goes On]
Investors betting on a rebound in Greece’s market and economy will likely twiddle their thumbs for a while. The International Monetary Fund argues that Greece will need a 30-year grace period on servicing all its European debt before the country pulls itself out its current quagmire, Reuters reports.
The IMF projects that Greek debt will hit 200% of GDP in two years, which could “only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.” It is also widely expected that GDP there will contract again in 2016.
The Greek economy has already contracted 25% in the past five-years as the government tackled with austerity measures designed to diminish the growing public debt.
“Greece, on the other hand, expects its economy to contract in 2015 and 2016 as the country adopts new austerity measures. Many investors, however, are attracted to the lower valuations in Greece, which they believe are commensurate to the additional risks,” Jay Jacobs of Global X told the Journal.
Global X FTSE Greece 20 ETF
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.