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Eurobank Equities - Two weeks of lockdown cost Greece1-1.2 billion euros

The Athens Stock Exchange, which continues to perform lower this year in relation to European markets (+ 8% vs. + 20%), is being tested again after the appearance of the "Omicron" mutation, which adds an additional source of concern, given the early indications. for higher transferability than "Delta", according to Eurobank Equities estimates. The crucial question is whether or not existing vaccines are effective against the new mutation, which will take two weeks to increase market volatility.

The cost to the economy

According to the stock exchange, despite the assurances of government officials that a complete closure of the economy should be ruled out, however, according to its calculations, a complete two-week lockdown would cost the Greek economy 1-1.2 billion euros, which translates into a slowdown of 0.6% - 0.7% of GDP.

On the other hand, as it estimates, with growth at 7% - 8% in 2021 and 4.5% - 5% in 2022, the general framework seems quite supportive for Greek stocks, despite the well-known international challenges. According to Eurobank Equities, Greek stocks are trading at a 25-30% discount compared to Europe, while "seeing" any correction as an opportunity for placements and an interesting entry point into the market.

Eurobank Equities recommends placements in shares with high and sustainable dividend yields, with limited effects from cost inflation (eg OPAP), shares that offer exposure to the "green transition" (eg PPC, Mytilineos), banks, in view of "Great consolidation" of NPEs, credit expansion and even more attractive valuations (National Bank is top choice) and cyclical shares and securities that benefit from the opening of the economy (OPAP, Mytilineos, Motor Oil).

Greek bank deposits at 100% of GDP for the first time since 2009

The decade 2000 – 2010 was undoubtedly the best in the country’s modern economic history. Joining the euro in 2002 secured fresh money of € 500 billion, which fell into the real economy in just eight years.

These are funds coming mainly from European and national programs and, of course, from cheap bank lending, which have spurred growth. It is characteristic that from the accession to the Eurozone until the outbreak of the debt crisis in 2010, the GDP recorded an impressive increase of 73 billion euros or 70% cumulatively, boosting the incomes of businesses and households.

This growth momentum was directly reflected in the balances of bank deposits, as in the period under review the deposit base increased from 124 billion euros to 237 billion euros, recording an increase of 74 billion euros or 90%.

In fact, in 2009 the savings exceeded the GDP, forming as a percentage of 103%.

Losses during the crisis

Things got worse when the State and then the banking system were excluded from the markets due to the known budgetary failures. In the 7 bitter years for the economy (2010-2016) GDP shrank by 56 billion euros or about 25%.

During this period, the change in deposits was, as in the upward phase, once again greater than the fall in GDP. In particular, they fell by a total of 116 billion euros, which corresponds to a fall of almost 50% from the highs of 2009.

The first 76 billion euros were lost mainly in the first years of the financial crisis, until 2012, as a result of the debt crisis combined with the Great Recession.

The political change of 2015

And while everything showed that a recovery would follow, everything was overthrown after the political change of 2015 and the failed handling by the newly elected government SYRIZA-ANEL.

It is characteristic that in just six months about 40 billion euros had fled, directed to investments or accounts abroad and in chests, for fear of the country leaving the euro.

The decline in size stopped, not because confidence was restored, but because capital controls were imposed to save the banking system. Thus, deposits as a percentage of GDP recorded a low after the entry into the euro, reaching 69% in 2016.

On the other hand, the decline in GDP may have been kept at a low level, but a great opportunity to make up for the losses of the immediately preceding period was lost. The increase could within three years (2015-2017) exceed even 10 billion euros based on the estimates of the baseline scenario.

The effect of the pandemic

After the change of course of the then government and the implementation of the third memorandum signed in the summer of 2015, the relevant figures began to increase again. Thus, from 2017 to 2019, the deposit base was strengthened by 21 billion euros, with the economy achieving three consecutive years of growth.

But the upheavals in the macroeconomic environment were not over. Everything changed again, after the outbreak of the pandemic. The contraction of GDP in just one year, last year, approached 15 billion euros with the recession exceeding 8%. But the same did not happen with deposits.

According to the official data of the BoG, from March 2020, when the lockdowns and the suspension of economic activities began, until last April, the savings of businesses and households in banks increased by 25 billion euros to 167.8 billion euros, an amount corresponding to 100% of GDP.

The last time this percentage was at these levels was in 2009. In any case, this increase was multifactorial and is not related to an increase in income.

Specifically, the most important reasons that catalyzed the size of deposits were the following:

– Suspension of of tax and insurance payments and loan obligations

– State support measures, such as repayable advance, employee compensation, compensation of property owners with rent cuts, and loan subsidy

Forced reduction of consumption due to restrictions on economic activity

Pfizer: Over 100 million investment in the second hub in Thessaloniki

The investment of the pharmaceutical industry Pfizer in the second hub in Thessaloniki amounts to more than 100 million euros, as the head of the second hub of the company in the city, Antonis Hatzimanolakis, said today. He added, among other things, that the American giant is always “looking” towards Greece and “if the appropriate incentives are found, it will proceed to other investments”.

Mr. Hatzimanolakis, head of the Business Operations and Services Center of Pfizer in Thessaloniki, which will be integrate seamlessly with the digital hub, the creation of which had preceded, referred to the new investment, on the occasion of the visit of the Minister of Development, Adonis Georgiadis, in the new venue, which will house both hubs.

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