Like other countries within the region that are yet to go into full-blown crisis, Greece failed from the beginning, and what’s more is that it was known. A second supporting link can be found here, from Spiegel Online.
The latest setback for Greece: booted the euro-zone member from its index of developed countries.
The decision, announced late Tuesday, is the first time the index provider demoted a country from its “developed” to its “emerging-market” category since the launch of its flagship emerging-markets index in 1987.
It affirms what investors have believed for years. Multiple bailouts by the European Union and the International Monetary Fund, a sharp contraction in gross domestic product and a still-large debt burden mean Greece now has more in common with Hungary than France.
MSCI, which estimates that almost $7 trillion of investments track its indexes, said Greece failed to qualify as a developed market based on several criteria, including the ease with which money managers can trade shares on the country’s stock market. About $1.4 trillion tracks the MSCI Emerging Markets Index.
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“Greece is not qualifying in terms of the size of the market,” Remy Briand, managing director and global head of MSCI index research, said in a conference call.
When it officially joins the MSCI Emerging Markets Index in November, Greece will have a 0.3% weighting, Mr. Briand said.
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The government continues to struggle with debt payments. It also is under pressure to raise money through asset sales, which are off to a weak start. On Monday, Greece didn’t receive any bids in the auction of its natural-gas monopoly, darkening the country’s financial outlook.
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Other countries saw promotions on Tuesday. Qatar and United Arab Emirates were moved to emerging-market status from the frontier category.
Tuesday’s moves by MSCI are “a reminder of the continued shift of economic power from the West to the East,” Thomas Costerg, an economist at Standard Chartered Bank, wrote in an email.
Full article: Greece Ousted from Index of ‘Developed’ Countries (Wall Street Journal)
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