Greece: Country on review for move to emerging markets

Athens News ^ | 6/21/2012

[bruinbirdman]

The country has been placed on review for relegation to emerging market status by index provider MSCI, which would make it the first country to be thrown back out of developed equity indices.

Analysts, however, reckon any such relegation would only happen if the country were to exit the eurozone.

MSCI, which has $7 trillion benchmarked against its indices globally, said on Wednesday that the country was no longer in line with developed markets' size requirements. It also said the country’s authorities had failed to address concerns over certain kinds of transactions.

"The Greek equity market has experienced sharp declines, which are of course associated with the situation in Greece, the economic situation. The market has shrunk quite significantly," Dimitris Melas, MSCI's executive director, told reporters.

MSCI criteria for classification include investor access, as well as market size and liquidity, and the country's overall wealth. While the currency is not a criteria, Greek per capita income of $25,000 is significantly above MSCI's cut-off for emerging markets.

The country made the jump from emerging markets to developed in 2001. But plunging prices mean Greece currently makes up only a tiny 0.0193 percent of the MSCI global markets index.

"I don't expect early action on this but clearly they wanted to have something in place so that if Greece leaves the euro, they can act quickly," Maarten-Jan Bakkum, investment strategist for ING's emerging market funds

[dagogo redux]

Over my shoulder, my wife points out that Greece is a SUBmerging market.

[luvbach1]

I don't know what that gobbledygook is about.All I'm worried about is getting Kalamata olives.

[sergeantdave]

I’m willing to pay the market price for baklava (not the hat). Maybe they could cover the country in the stuff and invite me over.