Greece is discounted, the changes are evaluated without any changes
By Demosthenes Trigas
There is no insertion / deletion from the MSCI Greece Standard Index, as the findings of the capitalizations mentioned in the MSCI revision are significantly expanded, with the result that the changes are limited. The Bank, if the capitalizations do not change significantly, the National to be included in the revision in May. At the same time, Mytilineos’s share in the May revision has no chances to start.
2022 started with the Greek market recording profits that brought in the first place, at least pan-European, but also up to the third place in the world in performance, with the main help of the banks. The FTSE Large Cap, in January, recorded gains of up to 7.5%, while the correction of international markets found the index to stabilize at 2% -3% higher than the end of 2021, despite the correction up to 11, 5 % for Wall Street and 9% for European markets. Respectively, the emerging markets index recorded gains of up to 4%, while the correction brought it back to 0% for 2022. It is recalled, as shown in the table, that the return of MSCI Greece for 2021 was + 8%, compared to -2.5% for emerging and + 18.5% for the global index. For historical performances, no comment!
The Greek stock market remains a small regional market in the world map, but the high returns are the ones that attract foreign investors. The index that is guided by foreign investors for Greece is MSCI. It is reminded that the shares participating in the index, with OTE having the highest stability and Jumbo the smallest, are: 1) OTE, 2) OPAP, 3) Alpha Bank, 4) Eurobank ,, 5) PPC, 6) Jumbo .
Based on the data of the house, MSCI Greece on 31/12/2021 traded 10.4 times the expected profits of the next 12 months, ie with a discount of 16.6% in relation to the emerging markets, where we have ranked the house since 2013, and 43% relative to the MSCI global index. The comparison with the emerging ones, at least in the present phase, is the most representative, since in the world index the dominant percentage consists of the developed ones and mainly the USA, where they participate with about 60%.
At the same time, based on the price index to book value, the discount where Greece is trading is impressive, as it approaches 50% in relation to the emerging and 70% in relation to the global index. The truth is that the book value for money (P / BV) has many weaknesses, however it is not a comparison measure that helps more in comparing banks.
At the same time, the dividend yield index appears higher in the Greek market compared to the emerging ones, as it stands at 2.48%, compared to 2.38% in the analyst index and 1.74% in the global index. In short, the Greek market seems to excel in places where there is calm in the markets.
On Wednesday, February 9, 2022, late at night, the announcements for the restructuring of the MSCI indicators of the quarterly revision are expected. The possible changes will take place on March 1, 2022, while in the previous session the trading activity appears increased, as the investors who follow the indices take their positions regarding the changes in the shares and the stations. The next announcement of the half-yearly review is set for May 12, 2022.
In this context, the right strategy for 2022 was not the so-called stock picking, ie the purchase of selected companies (some of which are the shares of MSCI Greece but also the listing) with a strong balance sheet and satisfactory dividend yield. I repeat the dividend yield, as in difficult years, as it has reached this year, it can bring the noticeable difference in relation to a portfolio that does not emphasize dividend yields. I am not just referring to the timeless performance of dividend reinvestment, but to the fact that the highest dividend yields tend to give mature companies, with stability in their profitability and shareholder behavior!
Why did the investment banks in the USA fall in double digits?
A few days ago, the largest investment banks in the world announced financial results for the fourth quarter / 12 months of 2021. The earnings per share announced by 4 out of 5 exceeded the market estimates, with Goldman Sachs “losing” the market estimates. However, the shares of the banks, despite exceeding the estimates, fell significantly, recording double-digit losses in the following days.
But why have stock prices fallen, as interest rate hikes favor traditional banks, as their profit margin widens with the widening of the broad deposit-lending rate? The main reason was the increase in corporate payroll, with Goldman Sachs and Citigroup holding the baton, as payroll costs increased by 33%, while JP Morgan and Bank of America increased by 14% and 10% respectively. It is recalled that the increase in wage costs was due to inflation, however the size and the continuing increase in inflation was what increased the fears of investors.
At the same time, the continuous channeling of liquidity in the financial system through the purchase of securities on the one hand, at the same time with low interest rates on the other, pushed the income from financial transactions to invisible heights, making the future comparison more difficult.
What will be born from now on has to do with how much the investment banks will manage to exceed the market estimates. The table shows that the market estimates in relation to October for 3 of the 5 are better, while for both of them they are slightly worse. What we are interested in is the trend created by the change of estimates, as it can ring the “alarm bell” for a possible significant decline in stock prices!
Agenda (01/2/2022 – 6/2/2022)
Retail and 6.4% dividend yield for Quest
Today, Tuesday, Quest and Alpha trust have set a cut-off date of dividend right of 1.25 euros / share (dividend yield of 6.4%) and 0.47 euros per share, while the Bank of Greece does not announce the results of the bank lending survey. for the fourth quarter of 2021. On Thursday, the Bank of Greece is important to announce the bank rates of deposits and lending for December 2021. On Friday, it has convened the general meetings. the Select (in case of non-quorum, the replay will take place on February 15).
Focusing on economic results (US), German GDP and non-agricultural payroll (US)
The industrial PMI in Germany and Great Britain is announced today, Tuesday, in the United Kingdom and in the USA in the afternoon for January, while later in the USA, the jobs that are at the end of December are announced. In terms of financial results for the fourth quarter of 2021, Exxon Mobil, Alphabet (MTK), Amazon.com (MTK), General Motors (MTK) and Starbucks (MTK) announce. Inflation is announced in the Eurozone on Wednesday, while in the afternoon the change of jobs will be seen in the private agricultural sector for January in the USA, which comes two days earlier than the official data of the American state for its salary. non-agricultural sector. On the same day, the general public to see the financial results of the fourth quarter of 2021 of AbbVie, Biogen, Meta Platforms – Facebook (MTK). Central banks in Great Britain and the Eurozone decide on interest rates on Thursday, with market estimates not expecting a change. On the same day, the factory orders in the USA for December are announced, as well as the non-industrial PMI index from the ISM institute for January. At the same time, ConocoPhillips, Estee Lauder, Merck (Dow Jones), Philip Morris, Ford, Gilead to announce the results for the fourth quarter of 2021. The factory orders for December are announced on Friday, while the afternoon of the same day is announced. the non-farm payrolls index at the same time as the US unemployment rate for April. The deviation from the market estimates for the wages of the non-agricultural sector gives strong volatility in the stock markets. Finally, the week closes with the results of the Bristol-Myers Squibb.
* Mr. Demosthenes Trigas is a Certified Stock Analyst & Market BETA Stock Exchange
** Republished by the newspaper Capital