“Most investors would never guess which country has the hottest stock market in the world in 2025. Here’s a clue: ten years ago, it was nearly bankrupt. The answer is Greece.”
With this striking introduction, Forbes dives into what it calls “the miracle of the Greek market,” noting that the MSCI Greece index has surged more than 70% this year, outperforming broader European indices more than twofold and significantly outpacing the S&P 500.
From Debt Crisis to Financial Transformation
Just a decade ago, Greece stood at the epicenter of the Eurozone debt crisis, having accepted three international bailout packages. Ten-year government bond yields soared above 36%, and default fears dominated global headlines. Today, the same country borrows at rates 0.50% lower than the United States and on par with France. Meanwhile, its stock exchange is thriving.
The 2009 global recession exposed years of fiscal mismanagement and weak tax enforcement. By 2012, speculation about a Greek exit from the euro was rife. The economy had shrunk nearly 27%, unemployment skyrocketed to 28%, and nearly half of all loans on bank balance sheets were non-performing.
The crisis forced painful but necessary reforms, Forbes explains. Under pressure from creditors, Greece implemented sweeping structural changes:
- Public spending was slashed
- Wages were adjusted to improve competitiveness
- Tax enforcement was tightened
- Corruption was targeted head-on
These austerity measures initially deepened the recession, but ultimately laid the groundwork for a spectacular recovery.
Modernization and Reform: Laying the Foundation for Growth
Over the last decade, Greece has pursued bold modernization policies:
- Digitization of government services and the implementation of myDATA e-invoicing have boosted tax revenues.
- The privatization of the Port of Piraeus and regional airports attracted foreign investment and upgraded infrastructure.
- New bankruptcy laws allowed banks to clean up their balance sheets, reducing non-performing loans from 49% to just 3% in major banks.
A post-pandemic tourism boom provided an additional growth engine. These combined forces have had tangible fiscal results:
- Greece’s debt-to-GDP ratio has fallen from over 200% to 153%
- Unemployment has dropped to 7.9%
- The European Commission forecasts 2.3% GDP growth for 2025, well above the Eurozone average.
Athens Stock Exchange: A Quiet Rally
The Athens Stock Exchange has rewarded these fundamentals. The Global X Greece ETF (GREK) has soared 70% in 2025, compared to just 25% for broader European markets. Much of this outperformance is driven by Greek banks, which make up about 50% of the ETF’s portfolio weighting.
According to Malcolm Dorson, Head of Emerging Markets at Global X, “Greek equities present a compelling opportunity that blends the growth potential of emerging markets with the stability of developed ones.”
Dorson notes that further upside is possible, particularly if FTSE Russell and MSCI reclassify Greece as a developed market, which could trigger large passive inflows from institutional investors.
Valuation Advantage and Investment Appeal
Valuations remain highly attractive. The GREK ETF trades at a price-to-earnings (P/E) ratio of 9.7, compared to 14.8for the Vanguard FTSE Europe ETF. This valuation discount, coupled with a 4% dividend yield, has caught the attention of both momentum investors and value seekers.
So, who should consider investing in Greek equities?
Greece may appeal to:
- Momentum investors seeking market diversification
- Value investors looking for growth at a reasonable price (GARP), in the spirit of Peter Lynch’s philosophy
While returns may not match the explosive gains of U.S. tech giants, Greek stocks offer disciplined growth potential at more modest valuations—a chance to participate in a rising economy without paying a tech-sized premium.
Source: pagenews.gr