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Global X MSCI Greece ETF (GREK - Free Report) , the sole Greece focused ETF, has shown some recovery in the past month and went up 13.4% during this period. However, the future of this ETF is uncertain considering Greece is back in the headlines and the reasons are ominous.
Rumors of the International Monetary Fund (IMF) trying to impose more austerity measures in Greece against participating in the €86 billion bailout program have surfaced again, albeit such claims have been rejected by senior IMF officials. This is not the first time when conjectures about IMF’s stance on Greece are being made. Earlier this year, a leaked conference call transcript published by WikiLeaks, sparked off political drama with the Prime Minister of Greece, Alexis Tsipras, questioning the good faith of the IMF officials.
In the document, IMF officials discussed that the only thing that will force Greece to adopt further stringent measures is a credit event. They further stated that if such an event occurs, it is unlikely that Greece will meet IMF’s budget target. Apart from that they also commented that such an event could lead Greece’s largest sovereign creditor, Germany, to restructure the debts (read: Debt Restructuring Puts Greece ETF in Focus).
Greece’s financial condition has been in the limelight time and again. Last year, Greece was on the brink of a default only to be saved by a multi-billion-dollar bailout by the EU and IMF. This allowed the country to avoid bankruptcy and stay in the Euro zone.
Meanwhile, several other headwinds remain. In a surprise move, the European Central Bank lowered its bond buying program to €60 billion a month from €80 billion but extended the program to December 2017 from March 2017. Additionally, results of Italy’s referendum can pull Euro zone down (read: ECB Trims But Extends QE: ETF Winners & Losers).
Meanwhile, there are signs of deflation in Greece. As per statistics service data, in November the headline consumer price index fell 0.9% from the year-ago period and the annual pace of deflation picked up from -0.5% in October. The annual EU-harmonized inflation rate turned negative to -0.2% in November after a positive reading of 0.6% in the previous month
Greece, which suffered a six-year recession, is hoping to ‘return to growth this year’, as per prime minister Alexi Tsipras. This invariably puts GREK in focus for the coming days. In fact, the situation might take a positive turn if Athens does not default on any debt and proceeds smoothly with its bailout program (read: Will Greek Reforms Boost GREK ETF?)
GREK in Focus
The fund tracks the MSCI All Greece Select 25/50 Index and is home to a small basket of 32 companies. The fund trades in average daily volumes of around 350,000 shares. It is heavily concentrated in the top two firms holding nearly one fourth of total assets.
Financials takes the top spot in terms of sector holdings, followed by consumer cyclical, energy and telecom. The product has AUM of $279.7 million and charges 63 bps in fees per year from investors. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (see: all the European Equity ETFs here).
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Greece ETF to Face IMF Pressure?
Global X MSCI Greece ETF (GREK - Free Report) , the sole Greece focused ETF, has shown some recovery in the past month and went up 13.4% during this period. However, the future of this ETF is uncertain considering Greece is back in the headlines and the reasons are ominous.
Rumors of the International Monetary Fund (IMF) trying to impose more austerity measures in Greece against participating in the €86 billion bailout program have surfaced again, albeit such claims have been rejected by senior IMF officials. This is not the first time when conjectures about IMF’s stance on Greece are being made. Earlier this year, a leaked conference call transcript published by WikiLeaks, sparked off political drama with the Prime Minister of Greece, Alexis Tsipras, questioning the good faith of the IMF officials.
In the document, IMF officials discussed that the only thing that will force Greece to adopt further stringent measures is a credit event. They further stated that if such an event occurs, it is unlikely that Greece will meet IMF’s budget target. Apart from that they also commented that such an event could lead Greece’s largest sovereign creditor, Germany, to restructure the debts (read: Debt Restructuring Puts Greece ETF in Focus).
Greece’s financial condition has been in the limelight time and again. Last year, Greece was on the brink of a default only to be saved by a multi-billion-dollar bailout by the EU and IMF. This allowed the country to avoid bankruptcy and stay in the Euro zone.
Meanwhile, several other headwinds remain. In a surprise move, the European Central Bank lowered its bond buying program to €60 billion a month from €80 billion but extended the program to December 2017 from March 2017. Additionally, results of Italy’s referendum can pull Euro zone down (read: ECB Trims But Extends QE: ETF Winners & Losers).
Meanwhile, there are signs of deflation in Greece. As per statistics service data, in November the headline consumer price index fell 0.9% from the year-ago period and the annual pace of deflation picked up from -0.5% in October. The annual EU-harmonized inflation rate turned negative to -0.2% in November after a positive reading of 0.6% in the previous month
Greece, which suffered a six-year recession, is hoping to ‘return to growth this year’, as per prime minister Alexi Tsipras. This invariably puts GREK in focus for the coming days. In fact, the situation might take a positive turn if Athens does not default on any debt and proceeds smoothly with its bailout program (read: Will Greek Reforms Boost GREK ETF?)
GREK in Focus
The fund tracks the MSCI All Greece Select 25/50 Index and is home to a small basket of 32 companies. The fund trades in average daily volumes of around 350,000 shares. It is heavily concentrated in the top two firms holding nearly one fourth of total assets.
Financials takes the top spot in terms of sector holdings, followed by consumer cyclical, energy and telecom. The product has AUM of $279.7 million and charges 63 bps in fees per year from investors. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (see: all the European Equity ETFs here).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>