World’s Best Stocks of 2019 Are Already Europe’s Worst This Year

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Athens Stock Exchange SA Following Resignation Of Prime Minister Alexis Tsipras
Photographer: Kostas Tsironis/Bloomberg

Investors who made a killing betting on Greek stocks last year are rushing for the exit amid concern the spread of coronavirus could dent the country’s tourism industry.

The exodus from the Athens Stock Exchange has already wiped out about a third of its world-beating advance in 2019 and dragged the index down more than 10% this year. It’s now the worst-performing equity gauge in Europe. On Wednesday, a 38-year old woman was hospitalized in the northern city of Thessaloniki, the first confirmed case of the virus in Greece.

Opposite Ends

After best performance globally in 2019, Greek stocks take a hard hit

Source: Bloomberg

*Performance in 2020 as of Feb. 26, 3pm CET

While the trajectory of the epidemic remains uncertain, the knee-jerk reaction for investors who flocked into Greek equities last year has to been to take some risk off the table. Tourism and travel receipts account for a fifth of the Mediterranean country’s economic output, according to latest data from the World Travel and Tourism Council.

The Athens stock index posted a 49% surge in 2019, fueled by one of the most attractive valuations in emerging markets and the promise of tax cuts and pro-business policies by a new government. Greece still faces major challenges, including a weak banking sector, high unemployment and a large stock of public debt, the European Commission warned on Wednesday.

“Given the performance that we had last year, it is pretty easy to lock in some profit taking,” said Dimitri Dardanis, the head of institutional equities at Piraeus Securities in Athens. “You can’t escape what is happening elsewhere. You have to ride the wave and, at the moment, there is not much to do.”

Greek equities gauge falls back to August lows

The Athens bourse was the second worst-performing equity index in February among 94 gauges tracked by Bloomberg, outstripped only by Lebanon. The losses this week were led by Piraeus Bank, which retreated 16%, followed by Coca-Cola HBC, Titan Cement International SA and Hellenic Telecommunications Organization SA.

“The fact that this is an unfolding story that people are being surprised by, it is not easy to predict what it is going to do to tourism,” Dardanis said. “Globally there is an issue that people do not want to fly. When that is going to impact us is still unknown.”

— With assistance by John Viljoen