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Is there value in the Greek market?

It is certainly cheap.

CAPE TOWN – The Greek economy has been in recession since 2009. Its GDP has shrunk by more than 25% in the last five years.

The country’s national debt is roughly 175% of GDP, much of which is the result of bailouts from the Eurozone over the last few years to prop up the struggling economy.

By any measure, this is not a picture of economic prosperity. The country continues to battle with deflation, unemployment and shrinking incomes.

Yet, there have been some signs recently that things are improving. The Greek statistics office recently released quarterly figures for the first time in years, and they indicate that some growth is starting to return.

On Sunday the Greek parliament voted to approve a budget that predicts 2.9% growth in the economy for 2015. Some analysts believe this is overly-optimistic, but it is nevertheless an indication of some confidence returning to the country.

A recovery in the economy could also represent an on opportunity for investors, and one way to access to it would be through the Global X FTSE Greece 20 ETF. This fund tracks the performance of the FTSE/ATHEX Custom Capped Index, which includes the 20 largest companies listed on the Athens Stock Exchange.

The ETF can be traded through the Standard Bank WebTrader platform, and may be attractive to investors who have a taste for deep value. The index is down 70% in the last five years and roughly 12% during the course of 2014 alone, however, it has fallen so far that it is now trading at below book value. In a world of expensive stocks, that might be appetising to the more risk-tolerant investor.

Investors will also have to stomach the hefty exposure that the ETF has to the Greek financial sector, which has had a well-document rough ride since the global financial crisis. The biggest holding in the fund is position of slightly more than 10% in the National Bank of Greece, with other large positions held in Pireaus Bank, Eurobank Ergasias and Alpha Bank.

The second largest component of the fund is Coca-Cola HBC, at just over 9%. This company doesn’t only sell Coca-Cola products into Greece, but other parts of Southern Europe as well.

For investors, the ETF also represents an alternative route into Europe that side-steps the larger countries that dominate regional funds.

“What might attract investors to Greece is that it is off the well-worn EU track,” says Simon Brown of JustOneLap. “Most EU funds are dominated by France and Germany, which are both giant economies.”

The ETF offers a dividend yield of 0.16%.

** This is a sponsored education series focused on offshore investing. The content is sponsored by Standard Bank WebTrader and Moneyweb are the content creator.

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