For investors tracking Europe's developed markets, Greece is once again on the map. On Monday, FTSE Russell officially reclassified the Greek capital market from 'advanced emerging' to 'developed', a significant step in the country's long recovery from its sovereign debt crisis.
Euronext Athens, which operates the Athens Stock Exchange, hailed the upgrade as 'a major international recognition of the significant progress and structural reforms implemented in recent years' and a sign of the market's growing appeal to global investors.
The reclassification moves 62 Greek stocks out of FTSE's emerging-market benchmarks and into its developed-market indices, according to Piraeus Securities. Such classifications are crucial because they determine where many institutional and index-tracking funds are allowed to invest, potentially opening Greek equities to a much larger pool of international capital.
A landmark for Athens
Yianos Kontopoulos, CEO of the Athens Exchange Group, called the upgrade a 'landmark achievement'. He said it could broaden the base of international investors, attract capital from funds that track developed-market indices, and create new financing opportunities for listed companies.
In a parallel move, index provider STOXX also reclassified Greece as a developed market. That allowed nine Greek companies — National Bank of Greece, Eurobank, Piraeus Bank, Alpha Bank, GEK Terna, Jumbo, Motor Oil, PPC and Metlen — to join the pan-European STOXX Europe 600 index.
The changes forced index-tracking funds to adjust their portfolios before they took effect. Funds that follow emerging-market indices had to sell Greek shares, while those tracking developed-market benchmarks had to buy them. Much of that trading happened during Friday's closing auction, pushing the value of shares traded in Athens to a record €4.26 billion, according to Greek financial website Euro2day. That figure, which includes both purchases and sales, surpassed the previous record of about €3.03 billion set in May 2008.
The key question now is whether the index-driven trading will translate into sustained foreign investment and greater liquidity in Greek shares. The upgrade comes as Greece continues to shed the legacy of its debt crisis, which peaked in 2010 and led to multiple international bailouts.
Ratings reflect improving finances
The stock market upgrade coincided with further signs of confidence in Greece's public finances. On Friday, Moody's changed the outlook on Greece's Baa3 sovereign rating from stable to positive, indicating that an upgrade could follow if economic and fiscal improvements continue. Scope Ratings went further, raising its rating from BBB to BBB+ with a stable outlook.
These decisions matter because stronger ratings can boost investor confidence and help a country borrow at lower rates. Both agencies pointed to Greece's falling debt burden, budget surpluses, improved tax collection, and reforms that have strengthened the economy and state institutions.
Finance Minister Kyriakos Pierakakis said the ratings decisions and the stock market's return to developed status showed that Greece had become 'more resilient and more credible'.
Greece's progress is part of a broader European picture, where deepening the internal market remains a key strategy for growth. The country's return to developed status also echoes similar moves elsewhere, such as Uzbekistan preparing its state giants for stock market listings, though Greece's journey is uniquely tied to its post-crisis recovery.
While the upgrade is a milestone, challenges remain. Greece's stock market is still relatively small compared to other developed European exchanges, and liquidity can be thin. But the reclassification, combined with improving ratings, signals that international investors are taking Greece seriously again.
