“Why to invest in Greece in 2019?” – People might be surprised that we are recommending Greece at a time of extreme volatility. This is the price for chasing hot tips, technology and latest “new, new thing.” Yet, Greece has advantages many investors oversee and that is a great advantage for 80/20 Investors.
Since the financial crisis in 2011, not many investors have had Greece on the map for investing their precious capital. But keep in mind that the “Smart Money” made plenty of money by just buying the deeply discounted bonds in the aftermath, as the country weathered the storm and got bailed out several times.
Not every country investment must be driven by high growth such as traditional frontier or emerging markets countries. As a matter fact, for many value investors at the end of 2018 would argue that growth stocks and growth countries will suffer the most in 2019. Here are the top 5 reasons why value-oriented investors should be considering Greece in 2019 in their asset allocation planning.
1. Improved Economic Outlook
According to Greek experts at the IMF, investment activity in Greece is expected to accelerate in 2019. They project a rate of 2.4 percent from an estimated 2.0 percent this year. Next year will see “investments of fixed capital in Greece grow by 12 to 14 percent on a yearly basis.” The driver will be mainly exports and tourism, that by year-end are predicted to rise 7.0 percent from 2018, and the slight increase in household consumption in the second half of the year by 0.6 percent on an annual basis, that will keep the growth rate in line with the estimates of the country’s creditors, the report noted. The Athens-based think tank maintained its economic growth forecast for 2019 despite concerns for the global economy. This is due to the fact that Greece is already coming from a very low base.
2.Top Travel Destination
No one can take this away from Greece! Greece is and will always remain one of the top travel destinations in the world. Whether Athens, the capital, with its amazing cultural and historical heritage or its numerous breath-taking islands – Greece has it all! Tourism has always been Greek’s main economic driver. During the financial crises, it was one of the few industries that made a positive impact even though numbers were temporarily in decline. As of 2018, Greece is back at the top of its game – at least in tourism. It is estimated it will account for 22.7% or almost one-fourth of the country’s GDP by 2028, with investments in the sector set to rise by 5.5 percent to 5.5 billion euros over the next decade according to the World Travel & Tourism Council (WTTC).
Furthermore, they confirm that out of 185 countries, in 2017 Greece ranked 25th in terms of direct contribution to GDP, 29th on the basis of total contribution, 36th for its direct and 40th for total contribution to employment, 40th with regard to investment, and 21st in terms of foreign visitors. Greece exceeded the EU average in most indicators. More specifically, the sector’s direct contribution to GDP is estimated to rise by 5.6 percent in 2018, compared to 14.3 billion euros or 8.0 percent of the total in 2017. Further forecasts see it accounting for 9.1 percent of the total at 21.3 billion euros by 2028. Here is some more stats: “The total contribution of travel and tourism to Greece’s GDP amounted to 35 billion euros in 2017 (19.7 percent of GDP) and is forecast to rise by 5.3 percent in 2018 and increase by 3.7 percent per annum to 52.8 billion euros (22.7 percent of GDP) in 2028.” No doubt, tourism will continue to play a key driver to power economic recovery and investment opportunities in Greece.
3. Low-Risk Country
Since the economic hurricane, the political risk has decreased substantially. Compared to many other countries in the emerging markets world, especially in Latin America, Africa or even Eastern Europe, Greece enjoys a stable democratic system and strong ties to key economies in Europe. It’s free of religious or regional political or economic risks related to Turkey or any other Middle Eastern country. On top of that, it is fairly easy to invest in Greece with the Euro still being their currency. Just buy Greek companies listed in the UK or through your internationally active brokers such as Interactive Broker. Country ETFs are also a great choice to get exposure to Greece. Just choose one from the leading firms such as BlackRock or Vanguard.
4. Skilled and Motivated Workforce.
Say what you will, most Greeks especially the younger generations can compete with any nation when it comes to math, technology and internet savvy. Just visit Athens and join any of the masterminds or societies and you will understand what I am talking about. Their highly educated and trained workforce now shows a motivation that rivals countries such as Vietnam or China. This might be out of necessity but its no reason to be ashamed of or to get scoffed at. Talk to any modern Greek, you will be impressed by their energy, their drive, and level of understanding of a topic they represent. Visit the Cube in Athens for a taste of modern and entrepreneurial Greece!
5. It’s underappreciated and undervalued
80/20 investing is many times contrarian investing. There are only a few countries for investing as unpopular as Greece. Even Turkey enjoys more attention from investors since the failed military coup and the horrific currency devaluation earlier this year. Greece is not on the map of many global and institutional investors causing undervaluation in a broad area of Greek stocks. This gives 80/20 Investors a decisive edge to bargain hunt or at least to be the first in the line for the next upswing. Micro and small caps are particularly undervalued. Those listed companies doing business in Greece and listed in London or Frankfurt are prime candidates to profit from increased attention Greek stocks and securities might be receiving in 2019!
Visit Greece, talk to the people on the ground, and enjoy the country!
Greece is far away from being the growth economy it once was with artificially bloated budgets and fake investments from European banks. And even though not all is well in Greece, much progress has been made to fulfill the strict demands by the EU and the IMF. We could argue, out of necessity, but the population has weathered the toughest part of the economic storm and that alone deserves respect from the international community.
But to get a real picture of what is going on and the opportunities in Greek stocks and bonds I recommend to visit the country once a year. Greece has an incredible history, culture, mind-blowingly beautiful islands and beaches, great food, etc etc. December is the best time to visit Athens and some of these amazing islands! I’m not fond of overcrowded places, and I love off-season prices, so I highly recommend to visit Greece in December!
In the month of December is one of the colder months of the year in Athens, but relatively warm and mild compared to most of Europe. It’s a great place to escape the cold and rain. The average temperature in December is 12°C (54°F), while the average low is 9°C (48°F). Many Greek resorts are closed during winter, which means fewer tourists and lower prices. Add to their supply of abundance, the famed hospitality of the Greeks and it’s irresistible.
Besides, I am sure Greek people will appreciate sincere, curious and open-minded attitude for their own views and hopes for the future. Visiting them now is a sign of solidarity and a vote of confidence that better times will come. Official tourist numbers have steadily recovered since 2011.