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Greek Equity Strategy | Energy Shock Playbook

Energy shock scenario – The prolonged Middle East conflict has tightened the oil market, while elevating shipping and insurance risk premia. Brent has moved decisively above $100/bbl amid conflict-related disruption to production and tanker movements. The risk is acute because the Strait of Hormuz is a structural bottleneck for global energy flows, with oil flows through the strait accounting for c20% of global petroleum liquids consumption. Against this backdrop, we frame the potential implications for Greek equities of a ≥6-month regime characterised by: (i) Brent persistently in a $100–$120/bbl range, (ii) elevated European gas and power price volatility through marginal pricing and risk premia, and (iii) a renewed “higher-for-longer” interest rate narrative, as energy-driven headline inflation slows the disinflation path.

Transmission channels – For the Greek stocks in our coverage universe, we examine each company’s exposure through four transmission channels, namely: 1) direct energy inputs (where fuel is a primary cost line or where feedstock is oil-linked; Aegean is the cleanest example); 2) inflation pass-through, which can act as the main defense (e.g. contractual indexation, price/mix actions); 3) interest rate sensitivity (e.g. floating rate debt structures, near-term refinancing); 4) demand shock and confidence effects (relevant for Greece in general, since inbound tourism is macro-critical).

Sector/stock implications – We view the Greek refineries (HelleniQ, MOH) complex as the biggest – and most obvious – beneficiary under such a $100+ Brent regime. This reflects supportive refined product pricing, stronger crack spreads (diesel and jet, in particular, have shot up materially) and potentially favourable inventory effects (despite higher working capital requirements), with the caveat for the need for some sourcing differentiation for MOH. By contrast, Aegean and tourism-linked cyclicals (Autohellas) face the clearest pressure, while potential offsetting fare adjustments risk triggering demand elasticity effects. Here we note that AIA is less dependent on traffic than investors think (given the air segment is regulated, and mainly hinges on inflation). Banks screen as mixed beneficiaries, with potential higher rates supporting asset-sensitive NII, although part of the benefit is likely to be offset by higher CoR should macro uncertainty persist. Real estate enjoys CPI-linked rent protection, although on the other hand higher yields would weigh on valuations. Energy-intensive industrials are exposed to rising fuel costs, but we believe Titan in particular is well positioned to offset these through pricing (albeit with a time lag). For power companies, the transmission from $100+ Brent is mainly through higher gas and wholesale electricity prices. We see PPC as a net beneficiary from stronger power prices, with the main risk being potential regulatory intervention if energy prices spike. Metlen also benefits through its integrated generation & supply platform and gas trading operations, with the positive impact only partly offset by higher energy costs for Metals.

Market reaction: positioning unwind rather than fundamental repricing – As in previous geopolitical episodes, markets have reacted swiftly. The ASE index is down c7% since 26 February, after having lost c10% until the trough, in line with the typical drawdowns observed in comparable geopolitical shocks (12-15%). The magnitude of the move appears somewhat larger than in Italy and broader European markets (c6% and 5% respectively), reflecting in part the strong rally that preceded the event. Of note is that the names that have sold off most aggressively have been recent outperformers, mainly banks (GR -11% vs Banks MSCI Europe -11%), rather than stocks that are affected more explicitly by the higher oil price (with the exception of AEGN/Autohellas – down 10-11%). The historical playbook suggests that once uncertainty fades, positioning will normalize and risk appetite will return, thus leading to the underperformers recovering quickly. With this in mind, we see scope to gradually rebuild exposure to banks, while also identifying compelling risk-adjusted value in companies whose earnings are either insulated from geopolitical stress or potentially supported by volatility, including GEK Terna, PPC, Metlen, and the Greek refining complex.