Greek stocks are “voting” for 2023 by international investment houses

Greek stocks are “voting” for 2023 by large investment houses, even at a time when the Greek stock market presents, from the beginning of 2022, a clearly better picture compared to that of the major international markets. In the eleventh month the General Index is up 2.13%, while the Dow Jones is down 4.81%, the S&P 500 is 14.39%, the Nasdaq is 26.70%, the DAX-30 is down 9.37% and the CAC -40 was down by 5.79%.

Leading international investment houses are optimistic about the Greek stock market, while predicting a difficult 2023 for the European markets.

The return of the Greek economy to investment grade is an important parameter for the course of the Greek stock market.

The acquisition of investment grade by Greece will also contribute to the upgrading of the Stock Exchange and the attraction of new funds.

Goldman Sachs predicts that the country has an increased chance of regaining investment grade in early 2023. As noted, the Greek economy has continued to improve, while it is expected to continue to outperform the Eurozone in 2023.

He points out that the downward trajectory of its debt to GDP to 150% by 2025, supported by a favorable macroeconomic framework and a long duration of European financial assistance, increase the chances of a return to investment grade in 2023.

The assessments of international investment houses

According to Citigroup, the valuations of Greek shares do not appear to be “stretched” in any way, despite the resilience that the AX has shown recently, as the P/E ratio of Greek shares is one of the lowest not only within Europe but also in relation to emerging markets and global markets in general.

Specifically, it is placed at 7 for 2022, 8 for 2023 and 7.1 for 2024.

According to the converging forecasts, the earnings per share of the Greek listed companies will jump by 56% this year, while in 2023 they will decline by 12% and in 2024 they will recover by 12.6%.

The dividend yield in the environment of Greek stocks stands at an attractive 4.1%, while the dividend yield in Europe as a whole stands at 3.4%, in the US at 1.6% in international stocks at 2.2% and in emerging markets at 2.9%.

JP Morgan is “voting” Greek shares for 2023, with the Greek stock market being the preferred market in the European emerging markets region.

According to its basic scenario, the Greek MSCI index will rise by 8% in 2023, while based on its positive scenario, it can register gains of around 15%.

The American investment bank Jefferies declares “Bull” for Greece. “Greece is on top and leading by example”, is the title of its report on Greek shares, where it maintains its positive attitude.

Goldman Sachs is positive about the prospects of the Athens Stock Exchange in 2023 as it places the Greek market among the seven indices from the emerging market environment which will record double-digit positive returns in the new year and higher than those of the pan-European Stoxx 600 index but also of the S&P 500.

He estimates that in a 12-month horizon the General Index of the A.A. it will climb close to 1,000 points and specifically 995 points, with a P/E ratio of 7.9 and a dividend yield ratio of an attractive 5%.

The Athens Stock Exchange is rising among BofA’s options, as the analysts of the American investment house are bullish towards the markets of the EEMEA category (Emerging Europe, Middle East, Africa) for 2023.

Greece ranks second highest among the 11 markets in terms of dividend yields.

The risk premium of Greek stocks is estimated at 12.4% and is high in the house’s estimates, while the earnings yield is at 7.3% and 10.3% in 2022-2023 and the dividend yield is estimated at 5.6 % and 6.2% for the same reference years and at particularly high levels.

Positive profitability dynamics, especially for banks, will support the outperformance of Greek stocks, according to Morgan Stanley. Greek equities have outperformed other developed and emerging European markets this year, supported by a very strong positive earnings revision for 2022.

The large discounts of Greek shares remain. In relation to Europe, the Greek market trades close to historically high discounts: 38% in terms of P/E and 34% in terms of dividend yield.

In relation to emerging markets, the same trend prevails (33% in P/E and 39% in dividend yield).

HSBC also gives a vote of confidence for the Greek stock market, which maintains an “overweight” recommendation for Greek shares and at the same time calls on investors to “pay more attention to them” as, on top of everything else, they also have low valuations. Growth remains strong and the valuations are attractive. The banks continued their good course and remain at the center of the Greek stocks story.

Greece still looks undervalued on a PE basis relative to the historical average. HSBC analysts rate all shares of the companies they cover in Greece with a “buy” recommendation.

The banks

Morgan Stanley gives a vote of confidence in the prospects of the shares of the Greek banks and they are its top choice. Greece’s risk reward is the most attractive and still offers upside, says Morgan Stanley, which places Eurobank’s stock on the “Banks: Financials’ Finest List” of its Global Banks picks. Her second choice from the domestic banking sector is Piraeus. For Eurobank he gives a target price of 1.38 euros (closing Thursday 1.03 euros), for Piraeus 1.96 euros (closing 1.33 euros) and for Alpha Bank he gives a price target of 1.34 euros (closing 1.012 euros).

Banks are not “derailed” by the measures requested by the government, according to Morgan Stanley, and estimates that the costs of supporting borrowers, reducing fees and increasing deposit rates are manageable.

HSBC sees high upside of up to 158% for banking stocks. The recommendations are buy with target prices for Piraeus at 3.30 euros (158% upside), for Eurobank at 1.60 euros (58% upside), for Alpha Bank at 1.40 euros (43% upward margin) and for the National at 5.20 euros (41% upward margin).

After a better-than-expected performance in 2022, banks will maintain high profitability in 2023, with operating profit as a percentage of assets around 2%, according to credit rating agency Fitch

The house expects that the reduction of bad loans of Greek banks will continue in 2023 despite the high inflation and the rapid increase in interest rates that creates problems in servicing the debt of households and businesses. After the plunge in non-performing loans (NPLs) in 2021 to 9.8%, Fitch estimates that the ratio will fall to close to 7% this year and will decline further in 2023 to close to 5%.

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