If you watch any news, you’ve probably informed that Greece has been going through a financial crisis for years. Greece is overextended and it risks defaulting on its loans. This fact shows that without some sort of bailout or extension, the country may not make good on its debts.
So investing in Greece at present is undoubtedly a high risk investing movement. Some persons might say “The country can’t pay their debts. Why invest my money there?” But history has taught us that when things look bleak, it’s usually the best time to invest. In general terms, when prices are depressed, that’s the time to invest and capitalize.
However it has to be understood that the Greek situation is not a temporary problematic situation that will balance out but an issue that runs much deeper. If we look at the history of the Greek index in order to see how healthy the stock market is, we will see things don’t look so hot. The economy is looking so bleak, that in 2013 MSCI (Morgan Stanley Capital International: an index that tracks markets around the world) dropped Greece from a developed country back to an emerging market. The reclassification means better potential returns but also significantly more risk.
Greece as a country is in dire financial straits. However, many companies that are incorporated are still producing, still selling, still earning money and generally they are still doing well. The problem is that the financial problems extend well beyond the Greek borders because the euro is slipping in value compared to the dollar. One of the biggest issues is that the euro is holding many countries back and not just Greece.
So you may ask: What does an investor do?
Undoubtedly, for persons who want to take risks, Greece is a great investment. In fact, investing directly into the Greek economy through an ETF (Exchange – Traded Fund) is the easiest way to do so. Τhree Greek ETFs currently exist: one from “Apha Asset Management” and two from “NBG Asset Management”. Another option is finding another mutual fund or index that closely tracks the Greek economy. If you are somebody who would take a big risk that could yield big gains, then you may invest in Greek bonds. On the other hand, people who are a little more risk averse can still capitalize on the depressed economy by investing in attractive Greek companies that are still poised to take off. Several larger companies will trade on a US exchange, so you don’t have to worry about losing money to the dollar/euro exchange. If you are one of the persons who need more of a sure thing, then investing in those companies on the US exchange might be the better choice.
Certainly there are ways to grow your portfolio by taking calculated risks. You can invest in the country, the index or the companies that are domiciled there. The decision where to invest is yours and it’s up to your age, the potential time to recover and the desire to risk.
Strong Points of Investing in Greece
Greece is a country, in the south east coast of Europe with a privileged, geographically strategic location, ideal for those seeking to supply the European market or expand their businesses to other parts of the world. Greece is a strategic link to the emerging markets of the Balkans, Black Sea, Eastern Europe and Eastern Mediterranean regions. Besides as a member of the European Union and the Eurozone, Greece is a significant gateway -without any trade barriers- to million consumers in Southeast Europe and the Eastern Mediterranean. Furthermore a strong point of investing in Greece is its competitiveness within the active population in terms of education, manpower costs and work productivity. Also its infrastructures are improving in a significant way, mainly due to the 3rd European Union community support framework.
Weak points of Investing in Greece
A significant weak point of investing in Greece it is the fact that Greek economy has always been and continues to be subject to intense governmental regulation. Moreover, growth has been financed by private sector loans and the public sector’s absorption of EU structural adjustment funds, which has caused a large public deficit. Furthermore according to Transparency International the country has to tackle high levels of corruption that affect several aspects of the economic and commercial life.
Key Sectors of Economy
Services are the largest and fastest growing sector of the Greek economy. Trade and financial services, real property management, tourism industry, health, education, transportation and communications are the largest service sectors. Greece has also a long shipping tradition.
Energy: Moreover, the country’s energy sector is evolving. Greece has a liberalized energy market and is evolving into an energy hub in this decade. Alliances with major foreign companies and oil and gas agreements have positioned Greece as the country to do business in energy.
Tourism: Greece ranks in the top 15 destinations worldwide. Annual arrivals are 20 million. Regional instability and especially in Turkey will contribute to the increase of tourist traffic in Greece.
Food & Beverage: is a high growth sector in Greek manufacturing. Twenty-five percent of the most profitable Greek companies are food & beverage companies. Production growth rate is almost double that of the entire manufacturing industry.
Technology: The ICT sector is one of the most significant in the Greek economy, driven significantly by the demand for automation and digitalization in the Greek public and private sector
Aid and Free Zones
Financial Aids are granted to companies that introduce new products and new technologies within the Greek market and to companies that modernize sites and production tools. Furthermore aids are granted to companies that protect the environment by making for example energy savings. In Greece, there is a variation of the amount of aids with the geographical regions. For further information on these aids, the organizations should be contacted ELKE and the Ministry Of Finance.
Furthermore Greece has three free-trade zones, located at Piraeus, Thessaloniki and Heraklion port areas. Greek and foreign-owned firms enjoy the same advantages in these areas. Goods of foreign origin may be brought into these zones without payment of customs duties or other taxes and remain free of all duties and taxes if subsequently transshipped or re-exported.