If Brexit were a drug it would be illegal, it tends to cloud the minds of intelligent people. Case in point. How about this for a headline “Why Britain is the new Greece” and of all places, that comes from the Wall Street Journal. I won’t give it much more exposure except to say, that a comment written about the article by a gentleman named Rick Cunningham puts the author in his place. “Comparing Greece to the UK is idiocy. The EU needs the UK. They not only do not need Greece but would be better off if Greece was out of the EU.” Terrific comment. Obviously he isn’t smoking anything illegal.
Let’s remember now, a little historical perspective. Greece fudged their numbers to get into the Euro while Germany looked the other way. So right from the beginning failure was predictable. However, the subject of this article is not about Britain, but about the one and only Greece.
“Greek economy seen returning to growth next year” is a very promising headline but to me it sounds more like the words of a song, tomorrow is always a day away. GDP growth in the first quarter of 2016 was a negative 1.3%, which followed two quarters of negative growth, so hopefully I am wrong, but I just don’t see how they will return to positive growth when they have only averaged .86% GDP growth since 1996.
Some good news though. The unemployment rate in March 2016 was down to 24.14% from a high of 25.25% in April 2015; however, youth unemployment in March was a whopping 50.4%. Isn’t it a shame that the Greeks threw out a government that was making adult choices, and elected a government that lives and breathes socialist doctrine, and now we see the results?
So is Greece an investment destination in the developing world? The absolute answer is no, but believe it or not, there are a couple of stocks worth looking at. The first is Jumbo SA (BELA:GA), which operates a chain of retail stores specializing in toys and baby products, probably recession proof. The second is Motor Oil Hellas Corinth Refineries SA(MOH:GA) involved in oil refining. The fear is that Greece’s main attraction is the tourism industry and that might suffer because British visitors who account for the second highest number of tourists, will stay home because of the value of the pound. However, the pound has been appreciating in value, though trading has been choppy. Knowing the British the way I do, nothing will come between them and their holidays, so do not fret Greece. That will be the least of your problems. I believe you need to become more market friendly and stop making statements that can only cause foreign investment to evaporate. If you do that, then your tomorrow may actually become a reality. I would like that. The choice is yours.
Peter Kohli, CEO of emerging market specialist DMS Funds.