Last Friday, the Global X FTSE Greece 20 ETF (NYSE:
) surged over five percent on volume that was nearly six times
the daily average. Much of that move can be attributed to the
19.5 percent gain by National Bank of Greece (NYSE:
), the largest of GREK's 22 holdings with an allocation of 12.8
Although GREK has a reputation for being
sensitive to regional shocks
, Friday's action in the $52.3 million ETF was not a one-off
affair. GREK has surged 39 percent in the past month, a
performance that is roughly three-and-a-half times better than
what the iShares MSCI Italy Index Fund (NYSE:
) delivered over the same time.
Whether it is hot money remains to be seen, but what is clear
is that GREK is nearly twice the size by assets today as it was
less than three months. As of Friday, the ETF had $52.3 million
in assets under management,
according to Global X data
. On March 1, that number was just over $28 million.
That was right after index provider Russell Investments
demoted Greece to emerging markets status
While other index providers have not yet followed Russell's
lead in demoting Greece, such a move cannot be ruled out. Last
year, MSCI (NYSE:
) said Greece was
on review for a possible loss of its developed
Catalysts Greece's reputation as a volatile equity market is
well deserved and the country's sensitivity to eurozone-related
drama is well known. However, catalysts have emerged that buoy a
bull case for Greek equities. For example, earlier this month,
Fitch Ratings upgraded Greece's credit rating
to B- from CCC
That is still a non-investment grade rating, but the improving
outlook for Greece has helped push bond yields lower. In March
2012, the yield spread between Greek sovereigns and German bunds
was over 3,500 basis points. That number recently declined to a
spread of less than 850 basis points.
In early May, Morgan Stanley said Greek government bonds were
among its top fixed income trades for 2013,
the Wall Street Journal reported
. More good news: Market participants now view the chances of
Greece departing the euro as slim and, if one can believe it,
Greece is poised to deliver GDP growth in 2013 and 2014.
Profit-taking is one near-term hurdle investors should be
aware of with GREK. The banking index on the Athens Stock
Exchange jumped almost 70 percent last week alone and GREK
15 percent of its weight to banking shares
. Then again, should that profit-taking in the ETF occur, it
could represent a buying opportunity.
A Double...And More? In less than a year, the Athens Stock
Exchange has more than doubled to over 1,000 from the 500,
bringing GREK along for the ride. The ETF traded around $11 last
August and is found trading above $21 on Monday. A move like that
may imply the easy money has already been made, but as
Value Digger notes
, it should be remembered that the Athens Stock Exchange traded
around 6,000 in 1999.
On the back of falling bond yields, a shrinking current
account deficit and increased investment in the country by
foreign multinationals, investors that can stomach the volatility
may be getting in on the early innings of a multi-year recovery
in Greek stocks by considering GREK, even at current levels.
For more on
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Profit with More New & Research
. Gain access to a streaming platform with all the information
you need to invest better today.
Click here to start your 14 Day Trial of Benzinga