June 19, 2024

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International funds are overweight in Greece – i.e. stocks…

International funds are overweight in Greece – i.e. stocks…

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Under the title “Don’t walk away from what you bought in May,” Bank of America adopts a bullish stance and maintains a constructive stance on European, Middle East and African stocks, noting that the international funds it invests in have an overweight in Greece.

As it notes, its positive stance in the region’s markets for the second half of 2024 is due to the fact that the monetary policy cycle in developed markets is changing, with the European Central Bank going ahead with its first interest rate cut this week. As he points out, although the Fed may postpone its first tapering towards the end of the year, Bank of America still expects the dollar to weaken in the second half of 2024 and this remains the main factor behind its bullish stance on E&E stocks. Middle and Africa. .

The Bank of Asia noted that the EMEA region as a whole saw the strongest inflows in more than a year last month, although they varied from country to country. Inflows were stronger in Central and Eastern Europe and Turkey, compared to occasional outflows from Gulf countries. On the other hand, investors continued to reduce their exposure to South Africa, likely due to post-election political uncertainty. The situation improved further in South Africa, Hungary and Turkey, but continued to decline in Saudi Arabia. However, the situation remains neutral to underweight across the region, with Hungary the main overweight versus Saudi Arabia the main underweight for the funds.

Bank of America notes that international emerging market funds are also overweight in Greece, as well as in Hungary (mentioned above) and Egypt, while underweight in most other markets in the EMEA region. As he explains, the numbers are taken from EPFR and are based on a sample of 140 actively managed funds (active funds) with the MSCI Emerging Markets Index as the benchmark, with assets under management of $123 billion.

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In terms of rankings, the United Arab Emirates took first place thanks to strong profits and supportive valuations, Egypt came in second place, Turkey returned to third place, and Greece followed Hungary in fifth place, with attractive profits and valuations as well. On the other hand, weak profits pushed Kuwait down the rankings.

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Greece’s risk premium comes in fifth at 9.5%, while the dividend yield is set at 10.9% for this year and 11.2% for 2025. Meanwhile, the Greek market offers one of the highest dividend yields in the region, at 5.9% this year. And 6.2% in 2025, which is the second highest percentage among emerging markets in Europe after the Czech Republic, which amounts to 7.3% this year and 6.6% in 2025.

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The Greek market’s P/E ratio is 9.3x, while its P/B ratio is 1.7x, both below the average of the past 24 years, as noted by Bank of America, with the P/E ratio in particular , it is moving below the average for emerging markets as a whole.

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The top 20 stocks from the EMEA region include Eurobank, for which Bank of America maintains a buy recommendation, as well as PPC, which it does not cover.

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Conversely, OPAP stock was placed among the 20 stocks in which emerging market funds held the lowest positions in the past three months.

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