Plenty of single-country Europe exchange traded funds are receiving ample attention, but almost overlooked in that scenario is the surging Global X MSCI Greece ETF (NYSEArca: GREK), which is up a staggering 21.5% year-to-date.
Although GREK, the lone ETF trading in the U.S. dedicated to Greek stocks, retreated a bit on Monday, market observers widely expect Greek equities to benefit from the outcome of the French presidential election that saw leftist candidate Emmanuel Macron win.
Macron’s opponent Marie Le Pen spoke overtly about possibly removing France from the European Union if elected. That could have devastating consequences for some of the more financially fragile Eurozone members, such as Greece. Last year, the Eurozone and the International Monetary Fund suspended proposed debt-relief measures for Greece. Greek banks, one of GREK’s largest sector weights, are seen benefiting from a Macron victory.
“Last week, the Greek government agreed to further tax, pension, and labor reforms designed to appease creditors, raise revenue, and improve the country’s business climate. Pending approval from euro-zone finance ministers and the Greek parliament, Greece will get another seven billion euros ($7.6 billion) from its bailout package to meet its July debt repayments,” reports Dimitra DeFotis for Barron’s.
Last year, Greece registered a primary budget surplus of €7.4 billion in the year ended November, or nearly €4 billion over its target due to lower spending and higher revenues. The IMF has pressured Europe to cut Greece’s budget target to a primary surplus of 1.5% of gross domestic product instead of its current goal of 3.5%.
However, some market observers have doubts regarding the country’s ability to ever repay its debts.
“Greece still has roughly €300 billion in debt, and its economy has slipped back into recession, but this agreement could give the International Monetary Fund the ability to persuade euro-zone creditors to provide added debt relief for Greece. With more debt relief, the IMF could offer more financial help,” according to Barron’s.
GREK, which debuted in December 2011, has $328.4 million in assets under management. The ETF holds 32 stocks, over half of which are financial services or energy names.
For more information on the Greek markets, visit our Greece category.