Features

Greece: back in business

Victory for the centre-right in last Sunday’s Greek election is good news for the country’s stockmarket.

Greece's newly elected Prime Minister Kyriakos Mitsotakis (L) is sworn-in © LOUISA GOULIAMAKI/AFP/Getty Images

Kyriakos Mitsotakis understands markets

Greece's newly elected Prime Minister Kyriakos Mitsotakis (L) is sworn-in © LOUISA GOULIAMAKI/AFP/Getty Images

Victory for the centre-right in last Sunday's Greek election is "good news for Europe", says The Times. The new prime minister, Kyriakos Mitsotakis, "understands the role of business and markets in generating prosperity", unlike the radical left-wing Syriza party of outgoing prime minister Alexis Tsipras.

The country's stockmarket is also cheering, says Michael Msika for Bloomberg. It has been the world's best performer this year, with the ASE benchmark index jumping by 45%. Government bonds have also done well. Yields have fallen to levels suggesting that Greece is barely riskier than Italy.

A decade of crisis

A parliamentary majority for Mitsotakis means that he must waste no time implementing pledges to cut bureaucracy, "force the pace of privatisation" and boost sluggish investment, says Stephen Pope for Forbes. Cuts to corporation and property taxes are also on the agenda.

Tax cuts could prove costly, says Ben Hall in the Financial Times, but the new prime minister may be hoping that planned reforms of labour and product markets could encourage the EU to loosen strict fiscal rules that require Athens to run a 3.5% primary budget surplus. Any deal could help boost growth.

Greece has returned to weak growth in the past two years, but still faces acute challenges, says Nektaria Stamouli in The Wall Street Journal. It is one of the "most difficult places in the European Union to do business". Above all, public debt equivalent to 183% of GDP will act as a long-term drag on performance.

A long-term solution to Greece's woes is likely to require a restructuring of its debt, as we have often pointed out. But despite the recent bounce, equities have still only recouped half of their losses from a 2014-2016 slump. Trading on a price-to-book ratio of 0.8, they look reasonably priced. The rally looks set to continue for now.

Recommended

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Just how green is nuclear power?
Energy

Just how green is nuclear power?

Nuclear power is certainly very clean in terms of carbon emissions, but what about the radioactive waste produced as a byproduct? It’s not as much of …
22 Jan 2022
Inflation: now we really have something to worry about
Inflation

Inflation: now we really have something to worry about

We’ve been worrying about a sharp rise in inflation for years, says Merryn Somerset Webb – now, we finally have something to worry about.
21 Jan 2022
Amazon halts plans to ban UK Visa credit card payments
Personal finance

Amazon halts plans to ban UK Visa credit card payments

Amazon has said that it is to shelve its proposed ban on UK customers making payments with Visa credit cards.
17 Jan 2022

Most Popular

Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022