Human beings are flawed in many ways. One flaw is the desire
to act in a repetitive manor, not adjusting and evolving as conditions change. Those
that can change prosper and those that don’t, well, sometimes it doesn’t turn
out so well. Greece has been stuck in a
repetitive negative feedback loop for almost a decade. Yes, many of their problems are self-inflicted
wounds. But the patient that has been in
a coma then moved to life support just left the hospital with a clean bill of
health. It seems most investors are preoccupied
or refuse to pay attention, preferring to remain soured to the Greek markets
after being disappointed time and time again.
With today’s conclusion of the Eurogroup meeting of the
Eurozone’s finance ministers and the IMF in Luxembourg, Greece secured the
final $9.5 bn loan installment officially putting an end to their financial
crisis. The IMF has signed on board as
well with their level of commitment to be determined pending conclusion of
long-term debt relief. Eurogroup Chariman Jeroen Dijsselbloem said today’s
agreement is “a major step forward” that will lead to Greece’s conclusion of
its support program in 2018.
The Eurozone also agreed on debt relief linking debt
repayment to its rate of growth as well as deferring and extending repayment of
$145 bn of loans – or around half Greece’s debt - by up to 15 years.
Additionally, the Eurogroup will specify further debt relief measures by July
27th. This is a precondition
for the IMF’s participation.
Believe it or not, with today’s meeting, Greece has decided
to steer the country in the direction of stability and prosperity. The political landscape is, dare I say it, stable
for the foreseeable future.
Unbeknownst to many investors, the Greek main benchmark
index, the ASE is one of the top performing equity markets so far this
year. It is up approximately 23% year to
date. I know, I know, how and when did
that happen. Though this sounds great,
the index is still off around 85% from its peak in 2007. Some Greek companies can still be found
trading around 20% of asset value. There
are many equity markets currently trading at historically expensive levels over-crowded
with heard like investors. Get over your
preconceived notions that nothing positive will come out of Greece. It’s time to acknowledge the progress and
positive developments and start a list of reasons to invest in Greece.
by Michael Carino, 6/15/17
Michael Carino is the CEO of Greenwich Endeavors, a
financial service firm, and has been a fund manager and owner for more than 20
years. He is optimistically invested in
Greek equities.