The source of Greece’s partial stock market recovery (note that GREK is still 60% off its all-time highs set back in 2014) is quite clearly Emmanuel Marcon’s election victory in France. Investors had been on edge that if populist candidate Le Pen won the election instead, that it would lead to France perhaps leaving the EU — or at a minimum, vehemently opposing further Greek bailouts.
Both Italy and Greece are hoping Marcon will be an ally in their continued appeals to the European Union to help restructure their massive debts. From VOA:
The ruling parties in heavily indebted Italy and Greece hope his enthusiasm for the EU will help them see off challengers such as Italy’s Five Star Movement, which wants a referendum on ditching the shared euro currency.
A Greek official said Tsipras and Macron had an amicable discussion in which Macron noted his previous support for Athens in tough bailout talks with EU powers.
A recent Bloomberg report also indicated that the Eurogroup could soon address the sustainability of Greek debt in the near future. The previous May 2016 agreement is wearing thin, so EU officials are likely weighing various options on how to keep Greece afloat.
All of these factors have rolled up into sudden optimistic sentiment on Greece and the EU in general. The result has been a big rally in Greek stocks, and of course the GREK ETF as well.
The MSCI Greece ETF (NYSE:GREK) was trading at $9.66 per share on Wednesday morning, up $0.24 (+2.55%). Year-to-date, GREK has gained 24.01%, versus a 7.13% rise in the benchmark S&P 500 index during the same period.