Nine stocks about to join Stoxx 600 after 13-year odyssey
Today's session represents the last opportunity to take positions in the companies that, starting on Monday, will become full members of one of the European benchmark indices, the Stoxx 600.
On the final opportunity of the trading day, nine companies are poised to join the Stoxx 600 after a 13-year journey. This move allows the listed firms to benefit from the growing passive investment flow through ETFs. The Stoxx 600 is one of Europe's major stock indices, and the inclusion of new companies enhances its relevance. The deadline for these changes to take effect is Monday, September 21.
Out of the 14 companies gaining entry into the Stoxx 600, nine are Greek. This Greek surge is motivated by the Greek stock market's recent reclassification from an emerging market to a developed one. As a result, Greek companies can once again participate in premier indices of the developed equity market. This Greek entry into the Stoxx 600 has taken a 13-year odyssey, beginning with Greece's sovereign debt crisis and culminating in their admission to the Stoxx 600 index.
The Athens Stock Exchange has recently been reclassified as a developed market, and it has risen significantly, with a 10% increase in value for the current quarter. It also leads the rankings in terms of profitability for the year so far, nearing a 30% rally. Currently, there is a positive momentum, and nine companies are set to receive an additional boost upon joining the Stoxx 600. These companies include Eurobank, National Bank, Piraeus Bank, Alpha Bank, Public Power, Metlen Energy, GEK Terna, Motor Oil, and Jumbo.
Among the nine Greek companies, KBW analysts show particular interest in the two Greek banks, Piraeus Bank and National Bank. Recent coverage from KBW recommended overweight positions for these banks, highlighting their strong credit growth prospects driven by corporate loans, mortgage recoveries, and improved economic conditions. Additionally, Greek banks have shown improved capital ratios and reduced exposure to tax-deferred credits.
Even after 13 years of uncertainty, Greek banks still trade at a 5% discount compared to their European counterparts, despite a strong return on tangible equity (RoTE) of 15% to 19%. KBW analysts emphasize that there are no hidden dragons here; only attractive returns on tangible capital near 20%. Greece dominates the nine new entries into the Stoxx 600, while five others are from the United Kingdom, including Endeavour Mining, Rosebank Industries, EasyJet, and Softcat.
The outgoing companies are more diverse geographically, with 13 Spanish companies joining, including Viscofan and several others.
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