Valuing Greek banks is difficult and non-performing loans (NPLs) are an issue many market observers are aware of.
“We believe this underperformance and bouts of volatility stems from the market’s intense scrutiny of Greek bank assets,” said Global X. “Greek bank assets are particularly difficult to value given that they face significant non-performing loan (NPL) issues, meaning many loans are in default and the banks (and the market) are attempting to calculate how much they expect to recover of their principal. Based on how the banks are carrying these loans on their balance sheets, they believe they can recover on average just over half of the assets that they have designated as non-performing.”
GREK, which has almost $404 million in assets under management, allocates over 39% of its combined weight to energy and consumer discretionary stocks.
For more information on the Greek markets, visit our Greece category.