Greek election euphoria is misplaced

Greek stocks and bonds jumped this week on the news of a bad result for governing left-wing party Syriza in the European elections and the announcement of a snap national election, increasing the prospect of pro-market and centre-right party New Democracy taking power soon. But the revision of asset valuation on the back of this doesn’t add up.

  • By Jasper Cox
  • 30 May 2019
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The FTSE/ATHEX Banks Index was up 27% this week, while the 10 year government bond yield dropped by about 30bp, approaching 3%.

The surge was remarkable because it came at a time of jitters in European markets: around trade tensions between the US and China, Brexit uncertainty, and — perhaps most relevant to Greece — signs of a new clash between Italy’s Matteo Salvini and the EU. It would be strange for Greece to be completely immune to Italian contagion.

Prime minister Alexis Tsipras was the bane of investors when his far-left party took power in 2015, promising to oppose bail-out conditions. Fast-forward four years and the once-radical party of Yanis Varoufakis has turned market friendly. Greece’s primary budget surplus was 3.7% of GDP last year, foreign direct investment is up, and like any good neoliberal Tsipras told the Financial Times recently that more investor-friendly reforms were still needed. Government bond yields have tumbled downwards. The sovereign is back in the bond markets.

So it is puzzling that markets reacted so positively to what appears to be the end of Syriza’s days in power. New Democracy is so far ahead in the polls that it will almost undoubtedly win the next election, now likely in early July and anyway by October. But it will have to go some way to justify the surge in asset prices, given how it is inheriting an improving economy from what turned out to be, against all expectations, a decidedly pro-market Syriza.

  • By Jasper Cox
  • 30 May 2019

All International Bonds

Rank Lead Manager Amount $b No of issues Share %
  • Last updated
  • Today
1 JPMorgan 329.19 1505 8.44%
2 Citi 302.82 1293 7.76%
3 Bank of America Merrill Lynch 259.71 1092 6.66%
4 Barclays 235.37 968 6.03%
5 HSBC 192.36 1061 4.93%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $b No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 38.80 175 7.35%
2 Credit Agricole CIB 36.89 155 6.99%
3 JPMorgan 29.35 74 5.56%
4 UniCredit 24.81 134 4.70%
5 Bank of America Merrill Lynch 24.60 69 4.66%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $b No of issues Share %
  • Last updated
  • Today
1 JPMorgan 9.98 67 9.69%
2 Morgan Stanley 9.41 44 9.13%
3 Goldman Sachs 8.72 45 8.47%
4 Citi 6.91 54 6.71%
5 UBS 5.28 29 5.12%