Greek equities are expected to face net capital outflows of 275 million dollars following the upgrade of Greece to developed markets status by MSCI, according to analysts at JPMorgan Chase & Co.
This change, which is scheduled to take effect in May, will trigger sales of 5.1 billion dollars from funds tracking emerging market indices, as stated in a note by the analyst team led by Pankaj Gupta.
On the other hand, funds investing in developed markets are estimated to make purchases of 4.8 billion dollars, thereby resulting in an estimated net outflow in the order of 275 million dollars.
«We estimate that the total net impact of passive funds for Greece will be negative», stated Pankaj Gupta.
Milestone for recovery...
MSCI upgraded Greek equities in March, marking a milestone in the recovery of the country from the debt crisis that had previously threatened the economy of the Eurozone.
However, this upgrade will reduce the weighting of Greek equities in the new benchmark indices, analysts at JPMorgan explain.
The weighting of Greece in the MSCI World index is estimated at 0.06%, compared to 0.61% that it holds in the MSCI EM Standard Index.
At the same time, seven of the ten Greek stocks currently participating in the emerging markets index are expected to be transferred to the developed markets index.
The weighting of the country is calculated at 0.41% in the MSCI Europe index and at 0.27% in the MSCI EAFE.
It is noted that the General Index of the Athens Stock Exchange has recorded a return of 246% (including reinvested dividends) since the beginning of the decade, compared to 94% for the Stoxx Europe 600 index.
Nevertheless, the Greek index remains below its 2007 high, prior to the global financial crisis, in contrast to most European indices that set new historic records this year.
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