Athens Stock Exchange: Among Goldman Sachs' top picks

Thus, Goldman Sachs increases the target price to 1,200 points from 1,075 points in its previous report. He points out that the valuation is more stable over time than in the short term, considering that there is a stable relationship between the valuation of Greek shares and domestic interest rates.

MSCI Greece outperforms

The report highlights that in the short term, Greek stocks are trading quite closely with the "core" European banks, relative to their respective emerging market stocks. MSCI Greece has outperformed its European bank peers as European banks have significantly underperformed due to the recent banking turmoil. However, the report in predicts a slightly higher performance of MSCI Greece in the future (+9% compared to +7% of CEEMEA)relation to the other shares of the Central and Eastern European countries of CEEMEA,.

“Often, the market may view concerns about the US debt ceiling as a growth risk, suggesting that emerging markets exposed to the US may underperform. Heading into the summer, we show a preference for Brazil over Mexico, South and Southeast Asia and MENA (Middle East and North Africa countries), over non-Asian regions in general, and Greece in the context of Europe's emerging markets.” , notes the Goldman Sachs analyst.

Greece, Qatar and Turkey

Outside of Asia, there are only 3 emerging market countries where the report predicts 10%+ returns based on valuation and oil. These are Greece, Qatar and Turkey, as the latter's stock returns are likely to be affected by the weakening of the Turkish lira.

The upside is around 8% over the next twelve months, while in valuation terms, the trailing-twelve-month P/E ratio stands at 8.6 times, below Goldman Sachs' target of 8. 9 times and 12.4 times for emerging markets. Earnings per share are estimated to increase by 8% over the next twelve months, with analyst consensus slightly higher at 9%, while the dividend yield is estimated at 5%.