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Greece Progressing For Upgrade to Investment Grade and Markets Should Follow – by Michael Carino

Courtesy of ZeroHedge. View original post here.

Greece should be about to get a credit upgrade to investment


grade from non-investment grade and the markets seem ill prepared for this


positive development.

Greek stock and bond markets have been on a negative


trajectory since the sovereign financial crisis of 2008/ 2009.  After such a long negative stretch, positive


investors seem to be a rarity. The investment landscape is filled with short


sellers and traders who have been attacking the markets on every negative


headline.  With a lack of positive investors,


the markets positive moves have been limited. Greece has made substantial


progress in moving its economy forward with the required adjustments of its


creditors.  As a benchmark of the limited


positive progress in the Greek markets, the main Greek stock market index, the


ASE, is down 85% from its peak in 2007.  Yet


the outlook for the Greek economy is positively poised with a long term upward


trajectory. This leaves the market susceptible to positive asymmetric skews to


its return profile.

Greece has now overcome its financial difficulties and


passed all the laws necessary to complete its financial assistance from the


international community.  This Thursday there


is a Eurozone finance ministers and Greek creditor meeting that will discuss


and most likely agree on a path forward that allows Greece to tap the public


debt markets, become self-sufficient in its funding and have its bonds accepted


as collateral for the ECB’s sovereign debt quantitative easing purchases. Once


this happens, Greece’s credit rating should soon follow to investment grade.


This will force and allow investors to access Greece’s markets again after a


protracted period of being non-investment grade and off limits.

When markets are depressed for such a protracted period and


the economic climate improving but not acknowledged in financial markets, the


potential for significant upside exists. If Thursday’s meeting continues to


show progress, investors will eventually catch on.  It should not take heavy inflows into the


markets to propel assets higher since the base is so low and investors so few.  Therefore, there should be a great focus on


Thursday and any positive developments should be felt instantly in the


marketplace. But it appears that the markets are prepared for no positive


developments.  This discounts all of the


positive steps taken so far.  It ignores


that Greece has been set on a healthy path to prosperity and all necessary developments


will be forthcoming, whether today, tomorrow or down the road.  It’s time to stop being hyper-focused on the


negatives and acknowledge the substantial positives in Greece.

 

by Michael Carino, 6/12/17

Michael Carino is the CEO of Greenwich Endeavors, a


financial service firm, and has been a fund manager and owner for more than 20


years.  He is optimistically invested in


Greek equities.

 

 

    


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