The Global X MSCI Greece ETF (NYSEArca: GREK), the lone exchange traded fund dedicated to Greek stocks, has been notoriously volatile over the past several years, but to its credit, GREK is up more than 37% over the past 90 days and some market observers believe now is the time to invest in Greece.
In March, Greek stocks slid to their lowest price since 1990 as growing concern over the global market, stalled bailout review and yields above 10% all helped push investors out of riskier assets, Bloomberg reports. However, equities there have been on a torrid pace since as Greek banks, previously a drain on GREK, recapitalize.
Banks represent close to a third of GREK’s weight. Earlier this month, GREK and Greek stocks rallied after Morgan Stanley upgraded Greek bank stocks to “overweight,” projecting the sector could rise 90% from current levels, reports Vikram Subheder for Reuters.
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Morgan Stanley upgraded Greece’s bank sector due to the area’s cheap valuations that did not reflect the compression in bond yields spreads that would result from a deal with Athens’ lenders.
In an interview with Yahoo Finance, former Greek Prime Minister George Papandreou emphasized that although times have been tough in Greece, the new government there is complying with creditors’ demands while noting “that banks in his country have been re-capitalized and plenty of companies now need investment to get on their feet.”
[related_stories]International creditors have asked Greece to prepare additional savings measures that would be passed into law as a type of last resort to make sure the country hits its fiscal targets.
If Greek bonds passed muster, Athens’ debt would be eligible for the European Central Bank’s expanded bond purchasing program; the country’s capital controls may be lifted and Greece would be on its way toward an eventual economic recovery, according to Morgan Stanley.
Related: Morgan Stanley Lifts Greek Stocks, Greece ETF
GREK could also benefit from additional monetary easing efforts by the European Central Bank as that central bank looks to keep a lid on the euro while stimulating economic activity, particularly in still fragile peripheral economies such as Greece.
ECB President Mario Draghi has previously signaled that the ECB could expand its quantitative-easing program to bolster growth and bring inflation back up, stating that the return of inflation to target is more important than the impact of ultra-low rates.
For more information on Greece ETFs, visit our Greece ETF category.