On Wednesday, June 12, 2013, the Greek stock market was downgraded by the world’s most important rating index, MSCI, with assets of 12 trillion. dollars, which is followed by the biggest international houses. A similar downgrade has not occurred for any other developed market stock market.

On June 30, 2022, for the first time in 10 years, from the official lips of Finance Minister X. Staikouras, at an event of the Capital Market Commission, the upgrade of the Greek capital market to a developed market was mentioned as a goal.

The return to the developed markets will change the entire “map” of the market, as it will be easier to make decisions on investments and taking positions on the A.H.A. by the managers’ risk committees.

The return of A.A. in the developed markets is a bet of great importance for the Greek stock market, which, due to the great economic crisis and the downgrading of the country’s debt, lost its position in the indices of the developed markets, with the result that since then the Greek market only draws funds from the small “pool” of investment portfolios and hedge funds placed in emerging markets, which negatively affects trading activity and stock valuations.

The emerging markets, in which the ASE is “trapped”, are a very small part of the global investment “pie” and attract correspondingly small funds. For example, in MSCI’s global index the weighting of emerging markets is only 13%.

It should be noted that the A.A. receives ratings from three agencies, MSCI, FTSE and S&P. Everyone sets their own terms and conditions for joining the mature markets.

But as the CEO of H. Mr. G. Kontopoulos has emphasized, the upgrading of the Greek stock market also requires the recovery of the investment grade from Greece.

Certainly the acquisition of investment grade from Greece will make a difference in the stock market. And this is because the first large purchase orders in Greek shares will come first. There are many funds that traditionally appear before the investment stage of each country.

Each of the three major rating agencies before giving the “green light” for the upgrade addresses the funds that have direct knowledge of any market that is being upgraded, if it is worth doing so. Given the green light, then the upgrade is a matter of time.

As we approach the recovery of the investment grade, the approach made by large foreign investors to the A.A. it’s like being placed in a developed market.

It is estimated that in a few months after reaching the investment grade, the houses will put the AX on the “watch list for upgrading”, which will be an important “signal” for strengthening the positions of investors in Greek shares.

Greece is one “step” from the BBB- category, which will open the doors to obtaining the investment grade, about 10 years since the last major restructuring of the Greek public debt (PSI), in 2012 when we were faced with the regime of “selective bankruptcy” .

We should note that Greece was left out of the investment grade with the start of the crisis in 2009-2010, with the start of the memoranda, while until then it was at the top of the “A” category of the investment grade.

The investment grade status is the one that will give a big boost to Greece and also to the Athens Stock Exchange, as Axia Ventures emphasizes, given the positive effects it will have on the economy and on Greek assets. A return to investment grade will allow Greek stocks and bonds to return to the radar of more investors. Essentially, these investors were unable to allocate capital to Greece after its downgrade to emerging markets, due to restrictions on their charter.

The investment grade “security” allows a much larger public of investors to invest in Greek assets and will prepare the entry of the Greek stock market into the “developed markets”. In developed markets, assets under management reach $52 trillion, compared to just $6.3 trillion. dollars in emerging markets.

According to Axia’s data, the capitalization of A.A. (as a % of GDP) was just 28.5% in 2022, compared to pre-crisis levels of 78%. Although a return to these levels is very difficult, the house believes that by 2025 this ratio will jump to 46% (about €105 billion capitalization using an estimated GDP of €230 billion after 2025). This will be a combination of higher valuations, taking into account the entry of new companies.

Greece’s achievement of investment grade status and AXA’s transition to developed markets will act as catalysts for future growth, as Axia notes. Although the AXA upgrade in developed markets may come 12 – 24 months after investment grade, market dynamics tend to be pre-positioning, resulting in increased trading volumes and corporate actions.

Axia says investors should then focus on strategic priorities and medium-term goals. Key areas of interest include updates on:

1) the discussions with MSCI regarding the fulfillment of the criteria for upgrading the A.X. to the status of developed markets, 2) the new introductions that are in the “hallway” of the A.X., 3) strategic acquisitions or joint ventures in neighboring markets, 4) investor activity (retail vs institutional participation) and 5) demand for data services and sophisticated data analytics products from institutional investors.