The recovery in the Greek economy was hindered by the coronavirus pandemic earlier this year, sending the Global X MSCI Greece ETF (GREK ) reeling in the process. However, the lone Greece ETF is higher by 18% over the past month and it may not be done offering upside.
GREK seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Greece Select 25/50 Index. The underlying index is designed to represent the performance of the broad Greek equity universe.
Investors often forget that Greece, although a member of the Eurozone and the European Union (EU), is an emerging market. By virtue of its status as a European nation and access to easy monetary policy in the region, the country may be better-positioned than other developing economies to deal with the aftermath of COVID-19.
“While the pandemic may be far from over, Greece appears better equipped to combat COVID-19 than other Emerging Markets, given Europe’s strong public health systems, ECB monetary stimulus, and support for the most vulnerable industries like tourism, shipping, and banking,” said Global X analyst Chelsea Rodstrom in a recent note.
Headwinds Could Lead to Opportunities
While the world’s more fragile economies, of which Greece is certainly one, are being hindered by the pandemic, Greece is drawing adulation on some fronts.
“While Italy and Spain were hit hardest by the health consequences of COVID-19, Greece and Portugal received praise for the success of its early and aggressive lockdown measures,” writes Rodstrom. “As a result of Greece’s successful containment efforts, and a desire to avoid more economic pain, the country plans to reopen between mid-June and early July to tourists.”
That’s important because approximately a quarter of Greek GDP is generated by tourism. Additionally, the EU is working with member states to shore up economies.
“Despite the challenges noted above, Greece may be better-positioned than most EMs to recover during post-COVID normalization,” according to Rodstrom. “We attribute our optimism to the country’s robust support from the EU, a unique monetary and fiscal backstop that most EMs cannot rely on. Greece is eligible to receive aid and may benefit from the rollback of restrictions in EU funding agreements, which previously constrained spending.”