Against another challenging backdrop, the Global X MSCI Greece ETF (NYSEArca: GREK) is one of this year’s best-performing single-country exchange traded funds. Even with Europe ETFs soaring, GREK stands out with a year-to-date gain of 26.4%.
And when remembering that Greece is officially classified as an emerging market, GREK is also one of this year’s best-performing single-country emerging markets ETFs.
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%.
“After seven years of tax and social reform that has slashed pensions, wages and social benefits, Greece has one of the best-run public finance performances in the euro zone. Last year the country had a budget surplus of 0.7 percent of GDP, almost as much as Germany. In 2009 the deficit was 15.6 percent of GDP,” reports CNBC.
The Eurozone macroeconomic environment has steadily improved, with a significant uptick in manufacturing and services PMIs over the end of 2016. Eurozone growth may continue to pick up speed ahead after the European Central Bank revealed increased loan demand and easing of terms and conditions on new loans to help stimulate the economy.
“Big money managers have started buying cheap Greek stocks from banks to lotteries as clouds over talks between Athens and its international creditors gradually clear, anticipating big returns. A deal in May when Greece agreed to more austerity measures raised hopes of possible debt relief for a country that has endured economic hardship for years, resulting in the longest winning streak for the Athens bourse in more than two decades,” reports Danilo Masoni for Reuters.
Eurozone and emerging markets stocks are attractively valued relative to the U.S. and those discounts are evident with some of GREK’s holdings. That theme has been prompting investors to revisit the lone ETF trading in the U.S. that is dedicated to Greek stocks.
“Now investors are eyeing Greece’s bond market. It has been reported that Greece will roll out its first sovereign-debt issue in three years in July if its international lenders specify longer-term debt relief for the country, and the European Central Bank includes it in its bond-buying program,” according to CNBC.
For more information on the Greek markets, visit our Greece category.