Greece’s Stock Market Upgraded to Developed-Market Status

FTSE Russell reclassified the Greek capital market from “advanced emerging” to “developed,” a change that took effect at the start of the week. The move shifted 62 Greek equities out of FTSE’s emerging-market benchmarks and into its developed-market indices. In parallel, index provider STOXX re-rated Greece as a developed market, adding nine Greek firms—National Bank of Greece, Eurobank, Piraeus Bank, Alpha Bank, GEK Terna, Jumbo, Motor Oil, PPC and Metlen—to the pan-European STOXX Europe 600.

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The upgrade follows a series of structural reforms undertaken after Greece’s sovereign-debt crisis. Both Moody’s and Scope Ratings adjusted their assessments of Greece’s sovereign credit: Moody’s moved its outlook on the Baa3 rating from stable to positive, while Scope Ratings raised the rating from BBB to BBB+ with a stable outlook. The agencies cited a falling debt burden, budget surpluses, improved tax collection and reforms that have strengthened the economy and state institutions.

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The reclassification prompted index-tracking funds to rebalance portfolios. Funds tied to emerging-market indices sold Greek shares, whereas those following developed-market benchmarks bought them. Trading during the closing auction on the preceding trading day reached a record €4.26 billion, surpassing the prior high of about €3.03 billion set in May 2008.

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Yianos Kontopoulos, CEO of the Athens Exchange Group, called the upgrade a “landmark achievement” that could attract capital from funds tracking developed-market indices. Finance Minister Kyriakos Pierakakis said the rating upgrades and the market’s return to developed status demonstrate that Greece has become “more resilient and more credible.” He warned that continued fiscal discipline, investment and productivity-boosting reforms are essential to sustain the momentum.

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