Global X FTSE Greece 20ETF (
) -- the only U.S.-traded ETF tracking the Mediterranean country
-- soared 5.47% Wednesday to 19.49, an 11-week high.
The gain came after a five-day holiday stock market break in
observance of Easter and May Day.
National Bank of Greece (
), weighted 7% in the ETF, led gains in the portfolio. It vaulted
18% to 1.19 in more-than-double average volume.
Low-priced stocks, however, are very volatile especially when
they trade deeply below their 200-day moving average as NBG does.
NBG shares have cratered 98% from their 2007 high and traded as
low as 61 cents a share in April.
Shareholders of Greece's largest lender approved in late April
a recapitalization plan to allow it to remain privately run.
"We've had a rebound in the banks in Greece because the worst
was priced in," Wojtek Zarzycki, chief investment officer at
Optimal Investing, based in Toronto with $150 million in assets
under management, said in an email. "Now that we've bounced back,
we should see more selling when bad news hits the wires."
Morgan Stanley strategists are recommending investors buy
Greek government bonds. They believe they offer an attractive
risk-to-reward given that their prices dropped 20% from their
January high. Yields on benchmark 10-year bonds fell below 10%
this month as fears over the Europe's debt crisis eased. Greek
10-year yields soared to 30% last year before the country's debt
"It is one of only a few fixed-income instruments that offer
double-digit total return... in the current yield-strapped
environment," Morgan Stanley's economists and credit strategists
wrote in a client note April 4. They also believe bond prices
will rise in a second restructuring.
Greece's economy will contract 4% this year after shrinking
6.4% last year, Morgan Stanley forecasts. They see no economic
growth in 2014 but are more bullish than most analysts.
"A recovery hasn't started yet, but data are becoming less
bad, as the shocks that hit the Greek economy -- including euro
exit worries -- are starting to dissipate, and bank deposit flows
now look fully stabilized," they wrote.
Global X FTSE Greece 20 ETF most heavily weights consumer
staples at nearly 25% of assets. That's followed by consumer
discretionary 20%, financials 15%, telecom 10%, energy 10%, basic
materials 8%, utilities 5%, industrials 4%, aluminum 4% and
GREK gained 7.92% year to date whileiShares MSCI EAFE Index
), tracking foreign developed markets, climbed 11.19%. But in the
past 12 months, GREK rallied 37.25% vs. 20.96% for EFA.
GREK appears to be forming a bullish cup-without-handle chart
pattern with a potential buying point at 20.41. It trades above
both its 50- and 200-day moving averages, indicating a strong
It carries an IBD Relative Strength Rating of 84 on a scale of
1 to 99. That shows its price performance has outpaced 84% of the
market in the past 12 months. Its B- IBD
Accumulation/Distribution Rating shows institutional investors
are heavily buying more shares than selling. This goes to show
the stock market looks ahead and bull markets climb a "wall of
worry." GREK may be pricing in an economic recovery that's yet to
be seen in the fundamentals.