Greece Back in Favor with Global Investors

Thursday, 16 May 2013 08:50 AM

By Dan Weil

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Talk about moving from the outhouse to the penthouse: Greece's stock and bond markets are on fire.

The Athens stock market has soared 80 percent in the last year, and government bond yields have been plunging since June. The 10-year government bond yielded 8.79 percent Thursday, down from almost 30 percent last year.

Investors are growing enthusiastic toward Greece, as worries lessen that it will leave the eurozone and its distressed assets offer juicy returns, The Wall Street Journal reports. That's quite a change from a year ago, when Greece was the sick man of Europe.

Editor's Note:
 
Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop.

Hedge funds and private banks are even buying Greek corporate bonds. Purchasers include York Capital Management, Dromeus Capital, LNG Capital and CQS, according to The Journal. And Daniel Loeb's Third Point is starting a hedge fund focusing on Greek assets.

On Tuesday, Fitch Ratings raised the country's credit rating one notch to 'B-' from 'CCC.' That's still major junk, but Fitch said the risk of Greece leaving the eurozone have "receded."

Jason Bruhl, head of European high-yield syndicate at Citigroup, told The Journal, "We're getting a consistent message from investors that they are growing increasingly comfortable with Greece and are more willing to take a look."

While some investors may be bullish toward Greece, the economic numbers coming from the eurozone aren't pretty. The euro area economy suffered its sixth straight quarter of contraction in the first quarter, shrinking 0.2 percent.

"The misery continues," Carsten Brzeski, a senior economist at ING, told Reuters. "Almost all core countries bar Germany are in recession, and so far nothing has helped in stopping this downward spiral."

Editor's Note: Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop.

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