- Greece reached a preliminary bailout deal with the international creditors after long and hard negotations for greek government and especially for greek citizens.
- Series of elections in France,Britain ,Germany in the coming days and months can boost the Euro.
- Greek stock market rallied almost 3%,still plenty of upside.
- Some stocks are looking very promising with good fundamentals.
Greece reached a preliminary bailout agreement with the international creditors after long and hard negotations for greek government and especially for greek citizens.The agreement,which was result of months of talks,will bring $7 billions euro or more accurately $7,6 billions euros of emergency funds to the Greek treasury.
Greek finance minister Euclidis Tsakalotos announced yesterday after 12-hours of meeting with the international creditors that ''there was white smoke'',alluding to the method that the Vatican uses to signal an agreement when selecting a new pope.The Athens News agency quoted him in a similar way.
The reality however is far from that characterisation as the big delay occured on negotations on the name of reaching better clauses by the prime minister of Greece Alexis Tsipras,finance minister Euclidis Tsakalotos and their political colleagues caused an amazing outflow of funds from Greece which is calculated around at $4 billions euros.Plus we must not forget that we are talking about a preliminary agreement,of course it is a step foward as through this agreement $7.6 billions euros will be given by the creditors to Greece, but serious subjects as the debt,the sustainability of the debt and the overall agreement have still not been confirmed (staff level agreement).
Of course the Greek market priced-in already the bigger part of this agreement, but there is stiil plenty of things that are not confirmed and they can help to create an upward move if they would be agreed in a favorable way.
As we know a lot of important elections are coming in the next days and months in the Eurozone. The Greek stock market and economy is highly correlated with other European markets as it is logical.
Looking back at the history of the greek stock market and French stock market(CAC), we can see that there is a good positive correlation of 44% between the Greek stock market and the German stock market(DAX), and the correlation is pretty impresive as it reaches almost 70%. Lastly, the Greek stock market and British stock market also have a correlation of 22%.
My point is that a favorable outcome at the elections of France and Germany, meaning leaving the far-right parties with no fuel and a less manuverability for Brexit could give a major boost to European stock markets that already have a high correlation with the Greek stock market. Also, it will be a great boost to Euro that will help all Eurozone countries including Greece. Emmanuel's Macron win on French elections could be the first of these facts on the coming week.
The Greek stock market rallied yesterday 3% (14:30 local Greek time) with around $110 millions turnover fueled mostly by the banks stocks which they ran from 4% to even 12% depending on the bank.
As we can see at the chart below Greek stock market rallied last week from 676 to 733 points today,that is a big jump of 60 points and a 7,7% rise.The bullish sign is that it surpassed the strong resistance at 710-715 area with a big gap up and on good volume of 180 million. We can count that this resistance now will serve as a good support on further upside. We can also notise the ascending channel since 2016 and the next resistances on the way up.
Despite the banks that seems to be very volatile in the Greek environment,we can find a lot of promosing companies with very good fundamnetals and less volatility that have a lot of room to the upside. It would be smart for long term investors to wait until there is a dip in the following stocks and buy them with a long term view as the trend for Greek stocks is turning bullish and they are still offered in discount compared to their intrisic value.
Here are some possible buys.
- Mytilineos Holdings SA (AT:MYTr): They are a competitive and powerful industrial group with a prensence in Europe,the Middle East and Africa in different sectors such as energy, metallurgy and construction. They have good fundmentals and solid earnings on every sector mentioned. It has been on an ascending channel since the beginning of the 2016 and it has been consolidating for 3 months now at $7 area. Breaking from this consolidation has a lot of room with first resistance at almost $8 as we can see at the chart.
2.Folli Follie (AT:HDFr): Is a well known worldwide jewellery, watches and accessories brand that founded in Greece at 1982 and now it's network reaches 30 countries around the world including New York, London, Paris, Hong Kong and many others.The stock as seeing at the chart below just crossed it's 200MA and has a lot of upside from 19.96 Euros where it stands now.
3.Hellenic Petroleum SA (AT:HEPr):A dynamic group with solid foundations holding a leading position in the Greek energy sector as well as in the greater area of Southeast Europe. With a net debt of 1,1 billion euros and a 7.3 billion euros turnover, it's a good deal at 5,410 euros per stock. If you considered the bullish climate at Greece and in Europe plus the positive news of a possible O.P.E.C. deal extension will also help further growth as the will increase oil's price.
4.Ellaktor SA (AT:HELr): Is an international holding group based in Greece with long term investements in key fields like construction,environment and participation in concession projects with a presence in 25 countries.With 1.5 billion euros in turnover and ranked in 139th place among the top 250 global contractors list by ENR, we think it is a good bargain. After recent deal for reconstructing a promising area of Vouliagmenh, the stock jumped in almost one month from 1.250 to 1.5 euro per stock.
Disclosure:I/We have no positions on stock mentioned and have no plans to initiate over the next 3 days. I wrote this article myself and it expresses my own opinions.
Thank for your time!