Greece is being relegated from a developed to an emerging stock market. Lex’s Oliver Ralph and Joseph Cotterill discuss whether Greek stocks are worthy of being treated as emerging with the country’s poor expected growth outlook.
When index provider MSCI reclassified Greece as an EM back in June, there were a mixture of jokes doing the round about “submerging” rather than “emerging”.
Fair enough. On Thursday, S&P Dow Jones Indices agreed, moving Greece down to EM as well. But what’s the actual implication? What stocks will be included?
It’s easy to see why Russell Indices, the US index and fund management company, is relegating Greece from its developed economies’ league. About time too. But why is Russell moving Greece into its emerging markets’ list. Emerging? Submerging, more like.
Emerging markets are the fast-growing economies of the world. So much so that many economists have stopped talking about EMs and refer instead to fast-growth economies. Jim O’Neill, the Goldman Sachs executive who invented the Brics, calls these countries “The Growth Map”.
By David Edgerly
Given the endless sovereign debt crisis in Greece, the collapse of the economy, the chaos and corruption of the country’s politics it is perhaps understandable that reasonable investors have lost interest in the Athens Stock Exchange. Index provider MSCI is mulling whether to reclassify Greece as an emerging market.
There’s quite a frontier feel to Greece at the moment. Phone calls to inquire about investing in Greece, in any form, are often met with either stunned silence or gales of laughter.
After all the dust has settled and the surprise over MSCI’s decision to put Greece on review for a possible demotion to emerging markets status has worn off, beyondbrics can’t help but wonder: what took MSCI so long?