Here’s how to make money out of Greece: advice from Ireland

Want to make money on Greece? Buy the company that runs the Athens stock exchange.

At least, that’s the advice from Irish securities firm Merrion Capital. Merrion recommends investors purchase stock in Hellenic Exchanges SA, the operator of Greece’s financial markets, whose shares have dropped 33 percent over the last six months as the nation slid back into economic turmoil.

“For investors who wish to invest in distressed situations, then Greece is certainly the place to be,” Darren McKinley, an analyst at Merrion, said. “Athens Hellenic is the best cyclical play on the market.”

While Ireland and Greece both entered bailout programs in 2010, the contrast in their subsequent progress has been stark. Ireland exited the rescue in 2013 and its benchmark stock index is up more than 50 percent since then. The Greek stock market came to a halt in June as the government fought with international creditors over a new bailout to avert default and a potential euro exit.

When the market re-opened on Monday for the first time since then, the benchmark Athens Stock Exchange General Index tumbled 16 percent. That was the biggest drop since at least 1987 even amid trading restrictions. It has declined 20 percent this week.

After trawling through Greek stocks for the best opportunities, Merrion says Hellenic Exchanges should benefit from privatization programs and a recovery in equities as a new rescue plan is put in place. Merrion also recommends buying Aegean Airlines SA, as the economy benefits from an influx of tourists.

Still, not everyone agrees on Hellenic Exchanges, which posted a 31 percent decline in first-half sales. This week, Eurobank Equities downgraded Hellenic to “hold” from “buy.”

Merrion remains undeterred.

“Given the distressed situation, the growth outlook should be much better for Athens exchange as earnings are coming off a low base, ” said McKinley.

[Bloomberg]