AXIA on elections: Investor confidence boosts – Investment grade earlier

The election result paves the way for Kyriakos Mitsotakis to implement bolder, pro-growth and pro-market reforms aimed at transforming the country.

Furthermore, in relation to the composition of the new Parliament, it talks about a change in the political scene, without strong parties in the opposition, and it does not fail to point out, like the international press, the "unexpected explosion" of the percentages of the parties sitting to the right of New Democracy.

As for Syriza, AXIA observes: "it remains to be seen whether he will try to reinvent itself and whether PASOK, a social democratic party, will be able to build momentum."

Given the positive catalysts coming, such as the recovery fund, increased private investment, a stronger financial sector and the advantageous position of specific sectors such as tourism and energy, the Greek economy is expected to maintain strong growth in the coming years, AXIA predicts.

In addition, the budget is projected to maintain primary surpluses, leading to a reduction in the debt-to-GDP ratio.

Thus, it is possible that Greece will obtain investment grade status earlier and probably by the last quarter of 2023, the investment bank estimates.

IT also points out that the victory of New Democracy has inspired confidence in the market, with Greek stocks rising and Greek government bonds already trading as if the country has regained investment grade.

According to XIA analysts, the investment will open the door to new inflows to the country's assets, and to the Athens Stock Exchange.

Investor confidence

In any case, concludes the investment bank's first note on the outcome of the Greek elections, the country is experiencing a growth cycle and despite the positive performance so far, we believe that the prospects have not yet been fully reflected in the market.

Favorable political developments (strong government, no political risk), combined with strong economic dynamics, the prospect of the Greek economy gaining investment grade status and attractive valuations, strengthen investors' confidence in the Greek market.