What they predict for the Stock Exchange and banks
They renew their confidence in the Greek economy and Greek assets international investment houses and place them high in their investment choices. The high growth of the Greek economy for the next two years at least – and much higher than the Eurozone – the improvement of the fiscal sizes, the recovery of the investment grade and the complete restoration of normality in the banks are the main points on which the positive assessments of foreign houses.
The latest foreign reports on Greek bonds are positive. Long positions in “good quality” government bonds of the eurozone region such as Greek, recommends that investors adhere to, the Goldman Sachs.
A long position in the 10-year Greek bonds against the Italian bonds stated that he is taking the JP Morgan. Fitch’s rating for Greece on December 1 will be critical, with JP Morgan finding the current Greek 10-year yield an attractive entry point.
THE Citi notes that there is a strong possibility that the Fitch to give Greece the investment grade. This means that four of the five houses recognized by the ECB – as the Scope Ratings added a few days ago to this group – they will rate Greece investment grade as early as 2023.
According to Citi, Wednesday’s auction for the reissue of the 10-year Greek bond was an important investment opportunity.
The positive sentiment was confirmed by the successful reissuance of the 10-year bond with the yield standing at 3.76% against 4.34% in the previous issue on October 18. The State went to the markets with the aim of raising 200 million and with the total offers amounting to 933 million.
The Stock Exchange
As a separate story of structural development in the emerging markets, he mentions Greece HSBC, maintaining an overweight position both for the country’s economic course and for Greek stocks, underlining that the country is one of the preferred investment destinations. In the environment of emerging markets, Greek shares and especially Greek banks are among the biggest stories of the next period, at a time when they also have very attractive valuations.
JP Morgan recommends an overweight recommendation for Greece from emerging markets, with an overweight recommendation for Greek banks, noting that Greek banking stocks are still at a high discount compared to Eurozone banks, given their higher profitability ratio their funds.
The General Index of the Athens Stock Exchange may rise by around 10% to 1,325 points by 2024 Goldman Sachs predicts, while it refers to a high dividend yield of 6%, which is among the highest levels, after Colombia (9% ), the Czech Republic (8%) and Chile (7%), which makes the domestic market competitive compared to other emerging markets.
The P/E valuation ratio for the Stock Exchange stands at 6.8x, while earnings per share are estimated to strengthen by 8% over the next twelve months.
UBS places Greece’s growth higher than the average assessment of foreign analysts. Its forecasts speak of 3% growth in Greece in 2024 (after 3% in 2023), i.e. moving 1.5 percentage points higher than the market’s consensus estimates.
The results of the Greek banks are particularly strongly characterized by the international investment houses and they give target prices for the banking shares much higher than the current levels.
Greek banks exceeded estimates according to JP Morgan and gives an overweight recommendation and high price targets. For Ethniki and Eurobank, it gives target prices at 8.10 euros and 2.60 euros, respectively for Alpha Bank at 2.20 euros.
Q3 2023 was another strong quarter for Greek banks that beat estimates, says Deutsche Bank, thanks to higher-than-expected core income. As analysts report, capital positions strengthened and profitability remained strong.
In this context, Deutsche Bank gives a target price of 2 euros and a buy recommendation for Alpha Bank, 7.1 euros for the National Bank and a hold recommendation and 3.3 euros for Piraeus and a hold recommendation.
The American house Goldman Sachs considers the third quarter particularly positive for Greek banks, arguing that there is significant long-term value. He gives a Buy recommendation for Ethniki and Piraeus, Neutral for Eurobank, with target prices for their shares set for Ethniki at 8.40 euros (+49.7%), for Piraeus at 4.20 euros ( +43.8%) and Eurobank at 1.90 euros (+22.6%).
Greek bank shares are traded at a discount of up to 26% in P/TBV terms, based on 2024 estimates, compared to the European sector and at a 5% discount, and in p/e terms (based on 2024 estimates), according to the National Stock Exchange, which highlights that Greek banks also showed a strong image in the third quarter of 2023. In addition, asset quality continued to improve with the average NPE ratio decreasing by 57 bp, due to organic actions as well as NPE sales. Greek banks have maintained solid capital and ample liquidity, which can continue to be invested in higher-yielding assets.
At the same time, however, foreign investors were sellers on the AX and in October for the seventh consecutive month. They realized outflows of 20.15 million during the month of October, in contrast to Domestic Unitholders who realized inflows of 20.15 million. They were preceded by outflows of 60.98 million in September, 79.80 million in August, 97, 16 million in July, 190.85 million in June, 95.46 million in May and outflows of 72.54 million in April. Total outflows in the last seven months amount to 616.94 million.
It should be noted that in the first quarter of the year foreign investors had put in “fresh” money of 267 million euros, mainly discounting the acquisition of the investment grade by Greece.
The withdrawal of some foreign investors has to a significant extent to do with the expected upgrade of the Greek economy to investment grade and the portfolios that invest in emerging markets are gradually withdrawn from the A.E. At the same time, many funds cannot invest, not because they don’t want to, but because they face technical obstacles. Funds that invest in countries with investment grade, based on their statutes, should wait for one, maybe even two officially recognized Houses, to include Greece in the investment tier.
The report of the American investment bank JP Morgan is typical, that American investors have relatively little exposure to the AX, and are looking for opportunities to enter Greek stocks.
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