International Investing Guide (Greece 2007)

Forbes Online , By Tatiana Serafin

 With little fanfare, Greece has become one of Europe’s best-performing economies and stock markets.
Greece, birthplace of the Olympics and home of ancient relics and honeymoon hideaway isles, is noteworthy for another reason. Over the past ten years its gross domestic product has grown at an annual rate of 6%, putting this economy far ahead of three of the largest European Union economies (Germany, France and Italy).

In 2000 Morgan Stanley (nyse: MS – news – people ) Capital International, which tracks global stock markets via hundreds of indexes, promoted Greece out of the emerging-market category. The catalyst for this change: Greece’s 2001 entry into the eurozone, which had imposed strict fiscal and monetary policies. The MSCI Greece stock index has a 12-month total return of 42%, a tad ahead of 41% for the MSCI Europe index.

Greece can now capitalize on its central Mediterranean location, says Harris (nyse: HRS – news – people ) Siganos, a managing director at Alpha Asset Management in Athens. One way is with ships. Over the past four years Greek shipping companies have benefited from increased trade with China and India, and freight rates have more than doubled. Today the shipping industry leads tourism in fund inflows from abroad. Greece has 3,800-plus ships of 1,000 tons or more, the largest fleet in Europe and the fifth largest in the world. Helped by cheap bank financing, shippers have at least 260 new vessels on order.

Danaos Corp., which listed on the New York Stock Exchange at the end of 2006, is the country’s eighteenth-largest maritime shipper by vessel tonnage. Its container ships are less exposed to the volatility found in bulk cargo. Profit in 2006 was down 18% to $101 million, on revenue of $245 million. The company attributes the decline in part to its investment in 28 new ships, 8 of which are already under 10- to 15-year contracts.

Tsakos Energy Navigation (nyse: TNP – news – people ), Greece’s third-largest shipper by tonnage, trades on the New York Stock Exchange. Last year sales rose by 45% to $428 million and net by 21% to $196 million. As of March Tsakos, which specializes in the more volatile oil tanker market and recently added a liquefied natural gas carrier, had nine ships under construction.

Two of Greece’s big banks, both available as American Depositary Receipts, provide exposure to southeastern Europe. National Bank of Greece (nyse: NBG – news – people ) is the country’s largest banking group and recently made a big acquisition in Turkey. Net income for 2006 was up 23% to $758 million, 20% derived from abroad. ADRs of the Athens bank sell for 14 times their Thomson IBES 2007 consensus earnings forecast.

Alpha Bank, with $12.8 billion in market capitalization, has been expanding in Romania and Bulgaria. Last year 10% of net income came from abroad; the bank expects this to double in three years.

Consumer goods is another Greek sector with exposure to the Balkans. In the first quarter revenues at Coca-Cola Hellenic Bottling (nyse: CCH – news – people ) were up 18%, driven by growth in emerging markets such as Romania. With $7.4 billion in sales, Hellenic is the second-biggest Coca-Cola (nyse: KO – news – people ) bottler in the world.

Greece still cashes in on its sunny Mediterranean climate and 15,000 miles of coastline. Over 12 million tourists a year visit Greece (more than one tourist per inhabitant), contributing 17% of GDP. The government took advantage of the 2004 Olympics and its tourist traffic to open up the funding spigot for improving roads and railways.


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