Is the Greek stock market expensive or cheap?

After a long period of continuous rise Greek Stock Exchange It appears that it has entered into the process of “digesting” the movement that has brought it close to its highest levels over the past twelve years.

In such cases, where the rise since September 2022 has been on the order of 70%, this process is very common and somewhat expected, since the gains are very large and any indication that the market is close to the top leads many. Investors to liquidate positions to secure a portion of profits. Along with the process of profit taking, which is usually accompanied by a purchase by investors who did not participate in the big rally, something else begins. Investors and analysts are trying to determine whether this peak will be local and temporary, or whether it will remain impervious for a long time. This research begins by examining the valuations of major stocks in the stock market, and this makes sense in our case as well.

Before going into details, we will give the first answer to this question: taking into account the decline in most stock prices from the end of July until now, valuations in the Greek stock market are good, i.e. not expensive, at least in most cases. Of course, it is not reasonable to expect a performance similar to the one mentioned above, but it is reasonable to assume that in a few months the trajectory of the Greek stock market will be positive and the prices of many major stocks on the Athens Stock Exchange will exchange more than the current exchanges regardless of whether they decline in between.

Looking at analyzes of major banks and brokerage firms in Greece and abroad, we immediately realize that Greek stock prices are generally cheaper than their counterparts in other foreign markets. This is what was described distinctively in the latest report of the major American bank JP Morgan Chase, which was released a few days ago. Here we must point out that the opinion of its analysts on the Greek market comes in the context of comparing it with others Developing markets (Emerging Markets) in Europe, Africa and the Middle East (EMEA), since Athens Stock Exchange It falls into this category.

Their opinion is that despite the fact that Greek market It achieved the highest performance in 2023 compared to the rest of the countries in the region Europe, Middle East and AfricaGreek stocks remain much cheaper than others. In terms of profitability and its relationship to book value, JPMorgan analysts point out that Greek stocks participating in the MSCI Greece Index are cheap compared to their historical prices. They also add that it is approximately 50% cheaper than those in other emerging markets.

They focus in particular on the very good valuations of Greek banks, especially after the excellent results they announced for the first half of 2023. JPMorgan analysts We are not the only ones pointing out the positive elements for Greek bank stocks, banking analysts point out that Greek bank stock valuations may have risen significantly since the start of the year but there is still plenty of room for further growth. Greek banks have recently been taken on by Greek EUROXX analysts, who estimate that their shares still have plenty of room for future growth.

We focused on banks and the opinions of several analysts regarding them as they have once again, after many years, gained a dominant position in the main indices of the Athens Stock Exchange, the General Index, the FTSE Athens Large Cap Index and the FTSE Athens Large Cap Index. MSCI Greece. This means that the path of these indicators and the overall picture of the Athens Stock Exchange is now largely determined by the path of bank stocks. This does not mean that the rest of the major indices have no room for growth, nor that global and Greek stock analysts do not deal with them.

The opposite is happening, as we have seen recently with analyzes that give a significant rise to the shares of companies such as Mytileneusthe Aegean Airlinesthe Jumbo And OPAP. All this shows us that for the majority of analysts dealing with major stocks on the Athens Stock Exchange, the stocks are cheap and deserve higher prices, not necessarily immediately but certainly in the coming months. As almost everyone points out, the performance of the Greek market will also depend on when Greece’s debt level will be raised – which everyone expects – and on our return to investment grade.

Returning to our question, we repeat the answer we gave at the beginning: Greek stock market share valuations are such that they create reasonable hopes that they will rise significantly in the future. This is of course provided that we do not witness major changes in the external factors affecting it International markets And the International EconomyAs we know that the Greek market does not move alone in the international stock market environment.

These kinds of changes sometimes rise and fall, as we’ve seen in recent years with the pandemic, the war in Ukraine, and the energy crisis. This means that issues such as the new spike in crude oil prices and the possibility that benchmark interest rates will remain at elevated levels for a longer period of time than equity markets had assumed until recently are very difficult not to impact on the course of the global economy. Athens Stock Exchange. Hoping that such external factors do not make their presence too noticeable, we believe that after Greek stock market stocks absorb the significant returns they achieved from last September to next July, they will return to the upside based on their attractive valuations.