Investors Unimpressed by Greek Bailouts End, Staying Away

Τhe old Hellenikon International Airport site. Photo: Eurokinissi/Georgia Panagopoulou

After more than eight years, the Aug. 20 end of three international bailouts of 326 billion euros ($378.44 billion) for Greece was met with a yawn by investors and warning from the lenders not to back off agreed reforms and austerity, leaving Prime Minister and Radical Left SYRIZA leader Alexis Tsipras in another bind.

The Athens Stock Exchange, which lost 28.5 percent of its value during the ongoing crisis, showed no signs of a big bounce back and foreign investors were keeping watch on whether Tsipras would try to derail his own deal by offering handouts to voters in a bid to reverse plunging in popularity after reneging on anti-austerity promises.

Greek bond yields are still at around 4.2 percent, too high for the government to issue any new offerings, with the rates more than three times higher than the rescue packages from the  Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) and the Washington, D.C.-based International Monetary Fund (IMF).

Tsipras’ claims of a so-called “Clean Exit” were dashed when the lenders said the econoy will need monitoring for years to make sure it hits fiscal targets and Tsipras doesn’t renege on them the way he did on voters.

Analysts and economists told Kathimerini the short-term prospects for Greek stocks and bonds do not look good and will continue to be affected by the climate abroad – especially in emerging markets and with investors keeping an eye on what the creditors do.

The political scene has become volatile again too as Tsipras is reportedly considering offering handouts and other measures to offset the crushing austerity he imposed, likely to use a Sept. 8 speech at the Thessaloniki International Fair (TIF) as a spring board.

He said he’s bringing a recovery but banks are still buried under bad loans although have sold many off to private companies to chase debtors and the economy has been slightly upgraded by ratings agencies.

Elections must be held by October, 2019 but Tsipras hopes to reverse more pension cuts set to begin Jan. 1, 2019 although the creditors said they would yank a debt relief program if he goes too far and acts unilaterally.

Teneo Intelligence Co-President Wolfango Piccoli told the paper that the prospects of Greek stocks attracting the attention of investors remain very limited because of international turbulence, especially in Turkey in the wake of the US doubling tariffs on Turkish steel.

He also said Greece is being hindered by not having any real long-term growth plan beyond hoping investors will come, if they forget being stiffed with 74 percent losses in 2012 in holdings in Greek bonds.

“Investors do not believe that the current government can deliver and implement such a strategy,” Piccoli said. A corporate tax rate of 29 percent is keeping them away as well.

While another record tourism season is helping, the long delays in allowing construction to begin on the $8 billion development of the former Hellenikon International Airport has made Greece continue to seem unfriendly to business, and some privatizations are still lagging, including the sale of Hellenic Petroleum.