The Global X MSCI Greece ETF (NYSEArca: GREK) is up about 17% year-to-date, but some of the shine has recently come off that trade as GREK resides about 19% below its 52-week high. Although GREK, the lone exchange traded fund dedicated to Greek stocks, has been retreating in recent months, some market observers believe Greek equities can bounce back.
There are still some catalysts that could potentially help GREK rebound. 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. Importantly, Greece’s finances are improving.
“Yields on the country’s government bonds, which have already taken great strides lower this year, hit a new low last week on news the government is preparing a major debt swap. The exercise, first reported by Bloomberg News, should allow Greece to sell bonds in future — and help end its dependence on the largess of its main creditors,” according to Bloomberg.
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.
Related: Greece ETF Looks to Reclaim Momentum
GREK, home to $346.8 million in assets under management, holds 32 stocks. The ETF allocates about 29% of its weight to the financial services sector and another 20.5% to energy stocks. GREK is also heavily exposed to Greek consumer trends with the consumer discretionary sector accounting for almost 19% of the ETF’s weight.
Greece’s ability to deal with creditors could prove pivotal to GREK’s fortunes in 2018. Related talks commence early next year.
“Success in the next round of talks with creditors, early in 2018, should finally provide the necessary conditions,” reports Bloomberg. “The IMF is no longer the barrier to progress it was: It stepped out of the way to allow Greece to increase its debt-load in July. It also softened its requirements on stress tests and bank asset reviews. Domestic politics are also less of an issue. Elections aren’t due for two years, and the ruling Syriza party’s ratings in the polls are lifting as the economy improves.”
For more information on the Greek markets, visit our Greece category.