Smelling New Democracy Win, Ratings Firms See Investor Confidence

The Greek stock market. (Photo by Eurokinissi/Vasilis Rebapis, file)

With the major opposition New Democracy on a path to unseat the Radical Left SYRIZA in July 7 snap elections, the prospect of the business-friendly Conservatives coming to power has ratings firms seeing a growth in investor confidence and banks stabilizing.

Prime Minister Alexis Tsipras’ party has hardcore elements trying to keep out foreign businesses and major developments, including a 600-million euro ($672.05 million) overhaul of the port of Piraeus by the Chinese company COSCO and the $8 billion makeover of the abandoned Hellenikon International Airport have stalled.

In separate reports, both HSBC and Citibank said they expect a New Democracy regime under leader Kyriakos Mitsotakis would provide a critical stimulus to the roller-coaster ride of the Athens Stock Exchange (ASE) and banks dealing with a mountain of bad loans.

The big win of New Democracy candidates in the May 26 elections for the European Parliament and Greek municipalities that led Tsipras to call the snap elections to prevent a bigger rout saw the ASE rebound.

HSBC compared Greek bank stocks to the mythical hero Daedalus who found his way out of the labyrinth of King Minos of Crete, the banks seen escaping from a maze of depressed prices in January 2019 to post a 122-percent increase in capitalization since then.

With New Democracy holding a 9.8 percent lead in the most recent survey, Citibank said the Conservatives could be poised to win by a big enough margin to have a majority of seats in the 300-member Parliament and not need a coalition partner and rule outright.

Mitsotakis said he would cut the corporate rate of 29 percent that was raised as part of an avalanche of tax hikes imposed by Tsipras in a surrender to the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) that put up a third rescue package for Greece in 2015, for 86 billion euros ($96.32 billion.)