Greek stocks are set to be reclassified as developed market status by MSCI in May 2027, marking a significant milestone in the country’s economic recovery following a debt crisis that began in 2009. MSCI, a leading provider of investment decision support tools, said the decision follows consultations with market participants. The move will end Greece’s status as the only Eurozone market not classified as developed by MSCI. The Athens Stock Exchange General Index is the main stock index for Greece; it represents the largest companies in the country.
The reclassification is expected to broaden Greece’s investor base. However, some analysts caution that the shift could dilute the country’s visibility within established benchmarks. MSCI stated that the reclassification would be implemented across all MSCI indexes at the May 2027 index review. Once reclassified, Greece will be integrated into the Developed Europe single-market index construction process for determining the MSCI Greece Indexes. Greek stocks were downgraded to emerging market status back in 2013.
While widely anticipated, some analysts predict the reclassification may result in net outflows. JPMorgan noted the shift from a country-focused emerging market investor base to a sector-driven developed market universe could reduce analyst coverage. Goldman Sachs also flagged potentially large stock-level flow impacts in both directions. The Athens stock index (.ATG) rose almost 3% following the announcement, recovering from its lowest level since early November. Despite the recent gains, the index is down 2.6% year-to-date after a 44% gain in 2023.
Greece regained investment-grade status in late 2023, and its economy has been outperforming most of its European peers. The country’s three bailouts totaled over 240 billion euros. However, millions of unprocessed non-performing loans from the debt crisis continue to slow economic growth and hamper the recovery for families and businesses still facing limited access to lending markets, according to the International Monetary Fund.
