JP Morgan reaffirmed its “neutral” recommendation on Greek stocks, pointing out in its analysis that upward factors are running low, while the valuation of Greek banks has all but closed the European average discount.
The US-based multinational finance company, however, stresses that Greek banks remain slightly undervalued compared to the emerging markets and European sectors, seeing greater dividend growth ahead. JP Morgan adds that this will only be reflected in the market under a bull-case scenario.
In a bear-case scenario, Greece’s GDP will continue to grow at a faster rate than the EU average. Still, the Greek banking sector trades with a high beta compared to European banks, with the valuation gap mostly narrowing.
Nevertheless, JP Morgan maintains Eurobank on its list of top 10 picks in the Central Europe, Middle East, and Africa (CEEMEA) region.
An equally interesting point in JP Morgan’s analysis is its reiterated position on a potential upgrade of the Greek market to developed status. It also restates its recommendation: “Greece: Don’t let a bad idea ruin a good stock market.”
Only four Greek stocks, National Bank of Greece, Eurobank, OPAP, and OTE, are above the minimum capitalization limits required for inclusion in the MSCI DM Greece index, while the three excluding OTE meet the minimum free float criterion.
