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Greek Stocks Rally: Selloff & Grexit Fears Overdone? -- Barron's Blog

Jan 29, 2015 10:36:00 (ET)



By Dimitra DeFotis

Earlier this week, new Greek Finance Minister Yanis Varoufakis put fear in its place, suggesting that investors may think Greece can check out of Hotel Eurozone anytime it wants, but Greece can never leave.

You would think that would be bullish for Greek equities. But the radical actions of the new left-leaning Syriza government took in its first three days in power -- including a halt to privatization of the biggest Greek port -- sent the Greek market and its bank stocks tumbling.

Today, the market is rebounding: the Global X FTSE Greece 20 ETF ( GREK) is up 3%, but is still down about 16% for the week. Shares of Alpha Bank ( ALBKY) are up 21% this morning, bringing their weekly loss to 25%. Shares of National Bank of Greece ( NBG) are up nearly 10%, down 33% for the week. Piraeus Bank ( BPIRY) is up nearly 15%, down 46% for the week. Eurobank Ergasias ( EGFEY) is up 7.6%, down 33% for the week.

On his blog in June 2012, Varoufakis said that debt, not Syriza, is the thing to fear, and he scoffed at a Greek exit from the Eurozone. Prime Minister Alexis Tsipras clearly knows a bargain when he sees one: by appointing the prolific economics professor as finance minister, he gets a free intellectual marketing machine, in English. This is 2012, mind you, presuming Varoufakis' blog page isn't updated:


"Should we be afraid of Syriza's 'ultra-leftism'? My answer is a resounding No. I recommend that (even those who have Greek amongst their languages) you do not read their manifesto. It is not worth the paper it is written on. While replete with good intentions, it is [short] on detail, full of promises that cannot, and will not be fulfilled (the greatest one is that austerity will be cancelled), a [hodgepodge] of policies that are neither here nor there. Just ignore it. Syriza is a party that had to progress, within weeks, from a fringe political agglomeration struggling to get into Parliament (at around the 4% mark) to a major party that may have to form government in a few short weeks. It is, in important ways, a 'work in progress'; and so is its unappetising Manifesto. No, the reason it is safe to take a gamble on Syriza is threefold: First, because it is probably the only party that 'gets it'; that understands (a) that Greece must stay in the Eurozone (despite the latter's obvious failures), and (b) that the Eurozone will not survive unless someone forces Europe to put an immediate halt on this "march off the cliff of competitive austerity" ... Thirdly, because, in any case, a vote for Syriza is not going to establish a purely Syriza government."


The new Greek government, meanwhile, is flirting with Moscow over Europe's Russia sanctions, The Wall Street Journal says. As for debt, there's much to read. Here's what Tsipras said Wednesday about debt, as reported by WSJ:


" 'Our priority is to support the economy, to help it get going again. We are ready to negotiate with our partners in order to reduce debt and find a fair and viable solution.' His remarks came just hours after members of his cabinet reaffirmed the government's commitment to reversing many tough reform measures Greece has undertaken as part of its bailout deal."