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Greece ETF: No Money, More Problems


The Global X FTSE Greece 20 ETF (GREK) is no stranger to challenging news flow. Just last week, index provider MSCI announced it will demote Greece to emerging from developed market status becoming the second index provider this year to do so. Russell Investments announced the same move in the first quarter.

MSCI noted that developed markets “reflect continuous market improvements introduced by authorities in other countries over the years,” but that few of the those improvements are reflected in Greece. Greece is slated to become a scant percentage of the MSCI Emerging Markets Index when the index adds the country later this year. [Another Index Provider Sends Greece to EM Status]

That is not the worst news GREK, already down 19.4 percent in the past month before the start of trading Thursday, has had to deal with this month. The ETF sank to its lowest levels since April Thursday afternoon after the Financial Times reported the International Monetary Fund could suspend aid payments to Greece next month.

Those payments will be suspended unless Eurozone policymakers find a way to plug shortfall of 3 to 4 billion euros that has arisen because Eurozone central banks refused to roll over Greek bonds they hold, reports Peter Spiegel for the FT.

News of the funding shortfall comes less than two weeks after it was revealed that Greece’s first-quarter GDP shrank 5.6% on a year-on-year basis. The country’s economic output is now just 75% of the European Union average. The impact of the bad news on the often volatile GREK is palpable as the ETF, when accounting for Thursday’s tumble, is down 11.2% just this month. [Greece ETF Bounces Back]

Aside from the aforementioned glum fundamental outlook GREK has to contend with, the technical picture is not pretty, either. At the start of trading Thursday, the ETF was nearly 12% below its 50-day moving average and almost 8% below its 200-day line. If selling pressure intensifies and support at $14 is violated, GREK could retest its 52-week lows in the $10.50 area.

Global X FTSE Greece 20 ETF

ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.