“Among the best-performing Europe gauges in 2013 after the government carried out the world’s biggest-ever debt restructuring, Greece’s ASE Index has become one of the worst,” Bloomberg reports. The stock market is slumping 21% as lenders from Piraeus Bank SA to Eurobank Ergasias SA tumbled, it adds.
Re-classified as a developing country in November, Greece saw stocks unscathed by a currency rout plaguing other emerging economies in the first quarter. Now, shares from Brazil to Thailand are rebounding and Greek equities aren’t following, dragged down amid slumps in European markets.
According to the report, the ASE has lost 11% since the end of June, the third-biggest drop among 92 national gauges worldwide, and is down 21% since reaching an almost three-year high on March 18. The retreat this quarter compares with declines of 7.7% in Italy’s FTSE MIB Index, 5.2% in Spain’s IBEX 35 Index and a 17% plunge in Portugal’s PSI 20 Index.
The Stoxx Europe 600 Index has fallen 2.4% since June 30 amid crises in Ukraine, Iraq and Israel. The MSCI Emerging Markets Index has advanced 2.5% since then.
Greek stocks started rallying about three months after the country carried out the world’s biggest sovereign-debt restructuring in March 2012, when the nation got private investors to forgive more than 100 billion euros ($134 billion) of debt. While the ASE is up 128% since its low three months later, it remains down 80% from the high in 2007.
The Greek index trades at 42.6 times analysts’ earnings estimates for the next year, compared with 12 for the emerging markets gauge and 15.1 for the Stoxx 600, data compiled by Bloomberg show.
Russian sanctions on European Union food imports in retaliation to penalties over the Ukraine crisis threaten to derail the Greek economic recovery. Russia consumes about 25% of Greece’s peach production and half its strawberries. According to Bloomberg, the trade value between Russia and Greece totaled $9.3 billion in 2013, mostly in gas and oil.
While economists forecast Europe’s most indebted nation will post its first annual expansion since 2007, a report showed last week that the country’s gross domestic product dropped 0.2% in the second quarter, after a 1.1% decline in the first three months of the year.
Bond investors are also walking away from Greece. The Bloomberg index tracking the nation’s debt fell 1.8% since the end of June after five straight quarterly rallies, the longest streak since 2005.
The ASE began to climb in June 2012 after plunging 52% in 2011, as Greek corporate profits fell for three years and posted a loss in 2011, according to Bloomberg. Earnings at ASE companies jumped to 73.41 euros a share in 2013, compared with a loss of 216.79 euros per share in 2012.