JP Morgan reiterated its positive outlook on the Greek economy recommending investors “go long” on state bonds against Italian bonds, predicting Moody’s would upgrade Greece to ‘investment grade’ in 2024.
JP Morgans expects passive capital inflows to continue due to the inclusion of Greek bonds in the global indices in January, citing unpublished data that suggests only moderate market flows for Greek bonds related to their inclusion in major indices since the beginning of 2024. These pressures on Greek bonds in recent sessions are likely due to selling flows in anticipation of a potential upgrade.
In its analysis, the US-based financial services bank anticipates the issuance by the Greek state of a 10-year bond within the upcoming weeks, thus reversing the recent decline upon the announcement of the new long-term bond.
JP Morgan believes Greece would behave as “underweight” of a low beta- coefficient – the measurement of the volatility of an individual stock compared to the systematic risk of the entire market – in a broader risk- scenario in comparison to Italy.
On January 4, in a separate analysis, JP Morgan estimated a 90% probability of the Greek economy being upgraded by Moody’s in 2024 (possibly by March 15), while the probability of upgrades by other rating agencies was set at 30%.
