The General Index closed above 2,300 points yesterday, marking its fourth consecutive
positive session and its best close since February, before the US-Iran war even began.
Up to this point, it may look like just another good day for the market. But this rally is not a random trading session. It is the tip of an iceberg that has been building for years.
THE MARKET IS SPEAKING
Yesterday, the General Index rose by +2.07% and closed at 2,318.73 points. This was the best close since February 18. During May alone, the Athens Stock Exchange is up +5.94%, while the year-to-date performance has now reached +9.34%.
And who drove this momentum? The banks. The banking index surged +2.77%, with Alpha Bank gaining +5% and Eurobank +4.76%. Among the blue chips, GEK TERNA stood out with a +5.67% jump, approaching its all-time high, while PPC climbed back above €21 and recorded the highest trading turnover of the day. New all-time highs were also recorded for ADMIE, Viohalco, and Trade Estates.
And this is where things become even more interesting. Attention remains focused on PPC. The company’s €4.5 billion share capital increase attracted demand exceeding €18 billion. Yes, you read that correctly. €18 billion in demand. The new shares officially begin trading today, Tuesday, May 26.
There is also another important development. On Friday, the MSCI index reshuffling takes place, with GEK TERNA being added to the MSCI Standard Europe index.
Of course, all this was supported by an improved international backdrop. Optimism surrounding a potential peace agreement between the US and Iran, along with the gradual reopening of the Strait of Hormuz, pushed oil prices below $100 per barrel. That acted as a “pressure release valve” for global markets.
THE BIG PICTURE
Now let’s move to the second part. The part that explains why this rally has real depth behind it.
A 143-page report from the EWC Investments Think Tank was released, and the conclusion is more than impressive. According to the report, Greece is showing the most structurally consistent recovery among all European peripheral economies.
What does that mean in practice? Let’s look at the numbers. Public debt declined from its historic peak of 209.4% of GDP in 2020 to 146.1% by the end of 2025.
Greece is currently generating the second-highest primary surplus in the eurozone. And what about non-performing loans? From a peak of 45.6% in 2016, they dropped to 3.8% by the end of 2024. That is the lowest level since Greece joined the euro.
And this is where the cycle of credit upgrades comes in. By March 2025, all six major credit rating agencies had restored Greece to investment-grade status for the first time in thirteen years. In fact, the Greek 10-year bond is now trading roughly 50 basis points below the Italian equivalent, a reversal very few expected.
At the same time, there is also what could be described as a “silent tax revolution.” The integration of cash registers with POS systems during 2024 produced remarkable figures. POS transactions increased by 471% in event venues, 221% in taxis, and 39% in restaurants. From this integration alone, public revenues increased by $2.66 billion in 2024.
The pillars supporting the economy? Tourism generated €23.6 billion in revenue with 38 million arrivals, marking a third consecutive record year. Greek shipping controls 21% of the global fleet. And foreign direct investment reached $12.8 billion, up 69%, at a time when inflows across Europe were actually declining.
Of course, there is still a major “but.” Not everything is perfect. Labor productivity remains at just 56.2% of the European average. The shadow economy still accounts for 20.9% of GDP. And the demographic problem is very real. Births fell from 115,000 in 2010 to 69,000 in 2024.
WHAT FOREIGN INVESTORS ARE SAYING
And as if the market rally and the think tank report were not enough, a major foreign bank also added its endorsement. HSBC, in a report published on May 20, issued another vote of confidence for Greek banks. The bank maintains a “buy” recommendation for all four systemic lenders.
And the upside potential? Piraeus Bank has the highest projected upside at 48%, with a target price of €12.10. Alpha Bank follows with 36%, National Bank with 34%, and Eurobank with 31%.
“So why is HSBC so optimistic?” you may ask. The answer lies in interest rates. HSBC now expects the ECB to raise rates by 75 basis points during the second half of 2026 due to energy-related inflation pressures. And that scenario works in favor of banks.
What does that mean in simple terms? Greek banks fund 45% to 60% of their assets through deposits that carry almost zero cost, while most of their loans are tied to floating interest rates. When rates rise, revenues increase quickly without a corresponding rise in funding costs. HSBC’s preferred picks are Piraeus and National Bank because they are the most sensitive to higher interest rates.
And the valuation? Greek banks are still trading at roughly a 15% discount on the price-to-earnings ratio, while dividend yields could reach as high as 7% based on 2027 estimates.