Report
Andreas Souvleros, CFA ...
  • Christiana Armpounioti
  • Marios Bourazanis
  • Natalia Svyriadi
  • Nikos Athanasoulias CFA
  • Stamatios Draziotis CFA
EUR 200.00 For Business Accounts Only

GREEK MARKET PULSE | Autumn Chill

The ATHEX has shed c3% since the start of August, significantly underperforming vs both broader Europe (Stoxx 600 +0.7%) and periphery markets (MIB +2.8%). Performance has been weighed down primarily by banks, which have fallen c7% over the period, compared to a c4% return registered by their EU peers. Non-financials have also stalled, with just a handful of companies in the green since August (mostly from the mid-cap space). Of note is that this move is out of sync with fundamentals, as most companies have reported healthy Q2 results. The relative underperformance in Q2 has brought the year-to-date total return for the ASE index broadly at par with Stoxx 600 (c11%).

What is driving the underperformance? The strong momentum during Q1’24 was interrupted somewhat by the disposal of HFSF’s stake in Piraeus in March, followed by other placements in May (Metlen, Jumbo). These liquidity events created a supply overhang which seems to have been weighing on the Greek market, in the absence of incremental buying appetite. The latter was also the result of MSCI’s decision to abstain from placing Greece on a watchlist for potential upgrade, thus pushing back a key catalyst for narrowing risk premia while leading to limited net foreign inflows ytd (excl. the Piraeus placement). Looking ahead to the remainder of the year, there seems to be a pipeline of equity supply totaling more than €1.2bn (mostly relating to NBG, BOC, and potentially Cenergy, Trade Estates, Kri-Kri), which is set to weigh on the market absorbing most of the foreign demand. As such, we expect the ASE to range trade until the end of the year, before new foreign money gets put to work in H1’25 (on hopes of MSCI finally placing ATHEX on watchlist for classification to Developed).

Is the fundamental story compromised? We consider all the above temporary setbacks. The fundamental story remains intact in our view, underpinned by: 1) A healthy macro backdrop (>2% GDP growth, superior profile vs the rest of Europe); 2) Ongoing fiscal discipline (primary surplus potentially near 2.5% this year and >2% in the medium-term); 3) favourable debt dynamics (no significant redemptions in the coming years, gross financing needs
Underlyings
Jumbo S.A.

Jumbo is a trading company based in Greece. Co.'s main operation is retail sale of toys, baby items, seasonal items, decoration items, books and stationery. A part of its operations is wholesale of toys and similar items to third parties. Co. and its subsidiaries have four geographical segments: Greece, Cyprus, Bulgaria and Romania. At June 30 2015, Co. operated 72 stores in Greece, Cyprus, Bulgaria and in Romania and the on line store e-jumbo.

MYTILINEOS S.A.

Mytilineos Holdings is an industrial group engaged in the sectors of Metallurgy, EPC, Energy, and Defence. Co. and its subsidiaries are engaged in three main operating business segments: Metallurgy, Constructions and Energy. Co. and its subsidiaries monitor its performance on Metallurgy and Mining Sector through the subsidiaries Aluminium S.A. (Alumina-Aluminium) and Sometra S.A. (Zinc-Lead). Co., through its subsidiary, METKA S.A., is an EPC Constructor in Greece.

Piraeus Financial Holdings S.A.

Piraeus Bank is a banking institute. Co. and its subsidiaries provide services in the Southeastern Europe, Egypt, as well as Western European markets. Co. and its subsidiaries operate in four main business segments: Retail Banking, which includes the retail banking facilities; Corporate Banking, which includes facilities related to corporate banking; Investment Banking, which includes activities related to investment banking facilities of Co. and its subsidiaries, including investment and advisory services, underwriting services and public listings, and stock exchange services; and Asset Management and Treasury, which includes asset management facilities for clients.

Public Power Corporation S.A.

Public Power Corp. is a vertically intergrated electric utility engaged in electricity generation, transmission and distribution throughout Greece. At Dec 31 2014, Co. and its subsidiaries generated electricity in its own 62 power generating stations of Co. and from the additional stations which belong to its wholly owned subsidiary PPC Renewables S.A, facilitated the transmission of electricity through its own power lines of approximately 12,273 km and distributed electricity to consumers through its own distribution lines for Medium and Low voltage of 235,100 km which are managed by its wholly owned subsidiary Hellenic Distribution Network Operator (HEDNO S.A.) (Medium and Low voltage).

Titan Cement Co. SA

Titan Cement Co. and, its subsidiaries (collectively, the Group) are engaged in the production, trade and distribution of a range of construction materials, including cement, concrete, aggregates, cement blocks, dry mortars and fly ash. The Group operates primarily in Greece, the Balkans, Egypt, Turkey and the U.S. The Group operates in 14 countries in Europe, North America and the Eastern Mediterranean and is organized in the following four operating (geographic) segments: Greece and Western Europe, North America, South East Europe, and Eastern Mediterranean.

Provider
Eurobank Equities
Eurobank Equities

Eurobank Equities is a Greek-based firm offering research, sales and trading services to institutional, corporate and private clients. The company is wholly owned by Eurobank, one of the 4 systemic banks in Greece.

Research is the backbone of Eurobank Equities' platform, with a team of 4 professionals committed to generating actionable investment ideas by providing timely research products. We are committed to offering value-added services to clients by filtering market noise and providing insights on the multiple sectors that we cover. Our universe includes 26 - large, medium and small cap - companies whose market capitalization amounts to 80-85% of the total market capitalization of the Athens Stock Exchange. Our research team also maintains the capacity to generate ad-hoc research for micro-cap listed companies.

Our team has consistently gained recognition among institutional investors for its quality research, having ranked No. 1 team in Greece at the Extel Surveys of 2013-2016 and 2018. We have also been named Leading Brokerage Firm in Greece over 2014-2016 and in 2018.

Analysts
Andreas Souvleros, CFA

Christiana Armpounioti

Marios Bourazanis

Natalia Svyriadi

Nikos Athanasoulias CFA

Stamatios Draziotis CFA

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