Thursday, June 13, 2013

Greece really is a submerging market

by James Mackintosh

Financial Times

June 12, 2013

MSCI has confirmed what everyone knew: Greece is a submerging market. The index provider formally reclassified Greece from developed to emerging status, and no one is likely to be pleased – except, perhaps, shareholders.

The sales pitch for emerging markets was that they were better run, low-debt countries, in contrast to the west. Fund managers need a new spiel.

In Greece, the combination of renewed political turmoil and ejection from the main world index went down badly with investors. Hellenic Telecom, one of two Greek members of MSCI World, fell 7 per cent, while the other, OPAP, dropped slightly. The overall Athens index ended down 3 per cent, off more than 20 per cent in four weeks, with 10-year bond yields back above 10 per cent.

Political in-fighting aside, the index move ought to be good for Greece. Investors focused on advanced countries are upset by political collapse, sovereign default and riots, all part of the job for emerging market specialists.


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