As we are approaching to the last trading day of 2020 we will recall this volatile and full of ups and downs year for the following unique moments : The rapid drop of stock prices in panic selling sentiment, owed to the breakout of the pandemic during the month of March. The spectacular rally (+11.46%) on November the 9th following solid news on the vaccine effectiveness, one of the best months for the Greek stock market for the last decades (November +29.4%), a unique record of 15 trading days in a row with positive market closing prices. It is the first time for the last several quarters that sellers didn't find lower entry points to re-establish positions, a fact related to the speed of the re-rating of the perspectives of the Greek stock market for the mid to longer term investment horizon.
It is easily seen that year-to-date losses for the Athens General Index have narrowed to -13% while for the FTSE/A.S.E. Large Cap to -17.5%. Sectors with positive performance year-to-date are the FTSE/A.S.E. Utilities (+39%), the FTSE/A.S.E. Industrial Products and Services (+12%) and the FTSE/A.S.E. Technology (+9%). Stocks that posted noticeable gains for the week ended on 18.12.20 were Alpha Bank (+15%), National Bank of Greece (+13%), Ellaktor (+13%), Quest Holdings (+7%). ADMIE (+4%).
We consider the following set of factors as very important in investors efforts to quantify the fair value of equities : a) the positive news from the vaccine development, b) the gradual return to lower tier levels of lockdown and c) the gradual attainment of a socially and financially accepted level of public health and herd immunity (through the vaccination within the next two months of a 25% - 40% of total population). If all above factors are positively activated and in sync then the exercise of the calculation of the time needed for the recovery of crucial sectors of the domestic economy (i.e. incoming tourism, outdoor dining, transportation) becomes easier.
The selection of the participants in the equity side of private and institutional portfolios for 2021 must take into consideration the ability of the Greek economy and the Greek listed companies to absorb rapidly the funds deriving from the Next Generation EU recovery fund. Due to the strong support of the European Institutions as well as the pro-business policies of the Greek Government, every week that passes provides additional data that Greece is continuously under the positive scope of international investors.
Indicatevily, Moody's Ratings noted to a recent report that Next Generation EU is credit positive for countries that will absorb the corresponding funding. The increase of investments will act as a multiplier to the recovery of GDP and this is a hint for rating upgrades.
Positive effect on a national economy level is calculated as follows : Bulgaria (22% of GDP, Croatia (17% of GDP), Romania (12% of GDP), Greece (11% of GDP). It isn't irrelevant that strategic investments are taking place from well-established international groups domestically during the last quarters (e.g. CVC Private Equity is very active, the Dutch Group Reggeborg is also active as a key player in the construction sector). On the other hand the initiation of the sale of the 49% stake of PPC in HEDNO (Hellenic Electricity Distribution Network) is expected to further boost international investors' interest for Greek assets.
Back again to the Athens General Index which has entered to a short term consolidation stage during the last few days and in a typical year end slow moving trading mood. The new funds that have entered in the Greek market recently are considered to be of long term nature (12-24 month investment horizon) and as the last weeks of the year are a break time for traders, we expect new money to be activated in the beginning of 2021 and the so-called January Effect to take place. Any delay will bring impatience and will make anxious the short term players. As we are trading close to the 800 points currently, we detect strong support at 720-730 points in case of a retreat while next upside target is the level of 880-900 points as a hint of the measured move from 700 to 800 points.