(Bloomberg) -- Greek stocks are one step closer to joining the developed markets universe once again as the country gradually returns to normalcy, leaving behind its decade long debt crisis.
FTSE Russell added the country’s equities to the watch list for possible reclassification from advanced emerging to developed-market status. It was initially downgraded to the developing nations category in 2013.
“An update on the watch list status of Greece will be provided as part of the interim update in March 2025,” FTSE Russell said in a statement.
Investors are returning to the nation’s assets as Greece climbs its way out of the deep economic hole it plunged into in the wake of the global financial crisis. The Athens Stock Exchange General Index has rallied about 53% since the start of 2023. Last year, the country regained investment grade status which it had lost in 2010 when its debt crisis started.
The move will boost confidence and mean “a lot of passive inflows to a stock market that has been bereft of liquidity for over a decade and a half, ”said George Lagarias, chief economist at Mazars. With many major companies in Greece owned by hedge funds, he said a reclassification “will allow them to exit at a good valuation and then allow the longer term players to step in, creating a positive virtuous cycle.”
Greece’s economy is expected to grow 2% this year, according to International Monetary Fund estimates. That’s more than twice the projected growth for the wider euro area. The country also aims to cut about 20 percentage points from its debt pile within just four years.
FTSE Russell’s decision “reflects the positive developments in our economy, the positive prospects ahead, and the government’s successful efforts in the privatization sector,” Kostis Hatzidakis, the country’s finance minister, said in a statement.
Yianos Kontopoulos, chief executive officer of the Athens Exchange Group, said “returning to the developed markets category has been a top strategic priority for the past two years.”
--With assistance from Michael Msika and Eleni Chrepa.
(Updates with quote in fifth paragraph.)
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