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U.S. investors eye recovering Greece

Monday, October 07, 2013 - 02:07

Oct. 7 - Funds run by billionaire investor John Paulson see Greece's recapitalized banking sector as an attractive investment, due to the country's recovery after a deep six-year slump. But as a new budget is introduced by the government Sonia Legg asks whether Greece really has turned the corner?

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25 billions euros has been pumped into Greece's top four banks in recent years. They're all majority-owned by the country's bank rescue fund. Greek bank stocks have also lost almost a third of their value this year - while equities have generally staged a recovery. Why then are U.S. billionaire investor John Paulson - and reportedly several other American hedge funds - ready to invest? Richard Hunter is Head of Equities at Hargreaves Lansdown. (SOUNDBITE) (English): RICHARD HUNTER, HEAD OF EQUITIES, HARGREAVES LANSDOWN, SAYING: "If we compare the situation in the euro zone to 18 months ago certainly fears of default and debt in general seem to have been surpassed by trying to get the euro zone into growth. So it's certainly for the more aggressive investors to be dipping their toe into European waters but its not been unheard of over the past couple of months." The beginning of the end is being forecast in Greece too. After shrinking by a quarter since 2007 the economy is predicted to grow by 0.6 percent next year. As he presented a new budget the country's Deputy Finance Minister said he was confident the six year slump is nearly over. (SOUNDBITE) (Greek) DEPUTY FINANCE MINISTER CHRISTOS STAIKOURAS SAYING: "Based on the income and expenditures, we estimate we will reach 1.6% of GDP, a primary surplus, under the terms of the economic policy program." Greece's tourism industry is rebounding and exports are rising. But the country is under no illusions. Public debt is expected to reach almost 175 percent of GDP next year and there's another major fly in the ointment. (SOUNDBITE) (English): RICHARD HUNTER, HEAD OF EQUITIES, HARGREAVES LANSDOWN, SAYING: "We've also got to bear in mind and this goes for the likes of Spain as well is the incredibly high levels of unemployment, especially youth unemployment, which clearly has a social impact as well as a financial one. So there is clearly still a great deal of work to be done." Greece has received 240 billion euros in bailout funds since 2010 and more debt restructuring is still needed. But Athens hopes it can return to bond markets in the second half of next year. And it will be encouraged by the fact that US investors see potential too.

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U.S. investors eye recovering Greece

Monday, October 07, 2013 - 02:07