Risky Business: investing in Greece, but there are takers

23/01/2012

Betting on Greece takes courage, as the debt-crushed country struggles to lure believers.

By Andy Dabilis for Southeast European Times in Athens -- 23/01/12

Investors are wading into some sectors, despite the general wave of red ink. [Reuters]

In Greece, a country recently rated by Credit Suisse as the riskiest in the world for investors, there's treasure to be found, even if you're not a mining company like Canada's Eldorado, whose Greek subsidiary, Thracean Gold Mining, has been awarded a license for exploration.

The country's economic crisis, as it strives to stave off bankruptcy and is readying haircuts of as much as 65% for lenders, may be scaring away some investors, but there are sectors where it's luring them too: agricultural technology, solar energy, tourism, transportation, logistics, luxury resorts, gas and oil drilling, waste management, and telecommunications.

"There are many opportunities here in Greece," Elias Spirtounias, executive director of the American-Hellenic Chamber of Commerce told SETimes. He said the notoriously business-unfriendly government is trying yet again to change that image and implement serious reforms. "Investors are looking for stability and an environment that offers them lower taxation and is easy to operate in. Greece doesn't offer that as the same level of other countries yet," he said.

The Credit Suisse report, which Spirtounias acknowledged was "kind of damaging". came on the heels of the country's fourth year of a deep recession and riots against austerity measures, and the Athens Stock Exchange having the worst performance in the world. Greece was at the bottom of 50 countries in the report, which gauged current account balances, state budgets, debt (Greece is buried under a 380 billion euros deficit) and other factors, and was more than just another big hit. Following were Portugal, whose economy is also struggling, and Iceland.

It was the kind of bad publicity that sent Development Minister Michalis Chrysochoidis scrambling to Copenhagen to try to attract Danish investment and create some good spin just before the Scandinavian country assumed the rotating six-month EU Presidency on January 1st. Kathimerini quoted him as saying "The economy adjustment programme aims at returning clear results in the sectors of competitiveness and growth in Greece," though he did not say how.

Thracean Gold Mining General Manager George Markopoulos, with a map of his company’s holdings in Greece. [Andy Dabilis/SETimes]

He could get some advice from George Markopoulos, general manager of Thracean Gold Mining, who said Eldorado believed in Greece despite the crisis. "The mining wealth of Greece shows gold deposits are very encouraging," he told SETimes. "The management of Eldorado knows how Greece is and how the crisis will work for investment," as world gold prices soar.

Eldorado has also recently acquired the Canadian European Goldfield, which offers a chance for further exploration in Greece through Thracean and expanding operations into Turkey and Romania, although some market analysts worried what would happen if Greece defaults and exits the eurozone.

Markopoulos said he's not worried. "In every investment you have second thoughts," he said. "There weren't any investments in this area and now we think there is a chance for us." Markopoulos is also a mining engineer.

Spirtounias said there are signs that the government has finally realised it can't chase away potential investors with labyrinthine bureaucracy, high taxes or ignoring their needs. He points to a revocation of cabotage laws that kept lucrative cruise ship business out of Athens' port of Piraeus, which has major Chinese investments, led by Cosco, which operates a major facility there. And, said Spirtounias, whose organisation hosts major forums on the business climate, more companies are beginning to realise the situation in Greece is not so dire they shouldn't take a chance.

But, he said, the new coalition government headed by former European Central Bank Vice-President Lucas Papademos, charged with keeping international aid coming for the debt-crippled country, has to keep rapidly pushing new measures to attract businesses before elections are held in April. "The sooner major reforms related to FDI's (Foreign Direct Investments) will be implemented, the faster those opportunities will be realised," he said.

Prime Minister Lucas Papademos may need the Midas touch to attract investors to more sectors. [Reuters]

The government is also negotiating with investors the long-delayed debt write-down, a Private Sector Involvement (PSI) that Spirtounias said companies want to see for before taking a leap.

The Bank of Greece said the total gross inflows of FDI capital, which reflect the performance of a country in attracting investment, increased in 2010 by 4.96%, although figures for the riot-scarred and turbulent year of 2011 are not available yet. They could be boosted though by the acquisition in May of the Greek pharmaceutical company Specifar for 400m euros by Watson Pharmaceuticals of California, which has its headquarters in New Jersey. Watson was particularly interested in a generic version of the ulcer drug Nexium that the Greek company makes. The drug market in Greece generates 6 billion euros a year.

The beleaguered Athens Stock Exchange, which fell 52% in 2011, the second-worst year in the last 50 for the bourse, began 2012 with a record-low turnover and losses for most stocks, but officials are hoping for more investment, even if it seems against all odds now.

The organisation's COO, Dimitris Karaiskakis, said while the Credit Suisse report doesn't help, he doesn't think it portents an economic catastrophe . "We've seen a lot of reports that disaster was going to hit," he told SETimes. "There are some positive numbers because we see the anticipation of foreign investors has not decreased [by] the same levels," as the exchange's performance and there is hope they may be perched to buy low. "After the PSI we are all expecting to see a change," he added.