FTSE Russell has reclassified the Greek stock market from advanced emerging market to developed market status, effective in September. The move covers 62 Greek stocks. Greece had been downgraded by MSCI to advanced emerging market status in 2013, during the debt crisis.
Trading reflected the news on the day it was announced. Share transaction value at the Athens Exchange closing auction reached 4.26 billion euros, a record that surpassed the previous high of 3.03 billion euros set in May 2008.
Index changes and fund flows
Index rebalancing typically forces emerging-market funds to sell Greek shares and developed-market funds to buy them. STOXX also classifies Greece as a developed market, which would allow nine Greek companies to enter the STOXX Europe 600 pan-European index.
The source material cautions that a surge in short-term transactions does not guarantee sustained foreign investment flows.
Ratings and official reaction
Moody’s has changed the outlook on Greece’s Baa3 rating from stable to positive. Scope Ratings upgraded Greece from BBB to BBB+ with a stable outlook.
Athens Exchange Group chief executive Yianos Kontopoulos called the market status upgrade an important achievement. He said it could broaden the international investor base, attract funds tracking developed-market indices and open new financing opportunities for listed companies.
Finance Minister Kyriakos Pierrakakis said the rating decisions and the market status upgrade show Greece is becoming more resilient and credible. He said the government must maintain fiscal discipline, promote investment and carry out reforms to raise productivity and wages.
Source: FTSE Russell
