You’ve probably seen us post this chart a few times this year, in some form or another.
It’s a 6-month look at the Athens Stock Market.
As you can see, since December it’s up massively.
Over at Alphaville, Joseph Cotterril gets the take from SocGen:
If the definition of a bull market is a gain of 20% or more does the 45% rise in the Greek equity market during the last few weeks constitute a bubble? We’re somewhat perplexed that amongst the great fanfare of rebounding equity markets and a return to “stock-picking” few commentators seem to be extolling the fundamental attractiveness of Greek equities as they might say Netflix (up 75% year to date), German Autos (+31% this year) or Industrial Metals (18%). Perhaps because this is not actually a return to fundamental investing, but simply a big fat high beta bounce entirely consistent with a market being force-fed cheap money.
The “market being force-fed cheap money” is always a popular line. A less conspiratorial line of reasoning might be that the ECB took the ultra-doomsday scenario off the table in December, via the LTRO, and so naturally that’s prompted folks to look at the most beat-down sectors from last year.
Regardless, buying the beat-down markets and sectors is definitely the theme of the year.
Here’s another chart we’ve run several times this year. It’s the Greek market (green) vs. the Egyptian market (orange).
They move really similarly, but the point isn’t that they have some mystical connection to each other — even though scenes from both countries had a similar look in 2011. The point is that in this global market, all of 2011’s trash markets move in the same way, both on the upswing and the downswing.
Regardless, it’s hard to argue for a major fundamental shift in anything Greek-specific.
But again, you don’t need fundamentals when tail risk is removed, and the market has become super “cheap.”
This chart from Goldman Sachs shows what a substantial portion of European stocks meet cheap screens at the moment.
Photo: Goldman Sachs