GIG Economic Bulletin – August 31, 2020

Several key transactions in the energy sector highlight Greece’s role as a key regional player, while the Piraeus Port continues to grow its share of container traffic into Europe, becoming the busiest port in the Mediterranean.

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Greece’s energy sector steals the limelight with the materialisation of deals that strengthen the country’s role as an energy gateway. The Port of Piraeus, that is majority owned by China’s COSCO, continues to climb the ranks and is now the 1st in the Mediterranean and 4th in Europe. Meanwhile, Thessaloniki based start-up InstaShop breaks records after being acquired by Germany’s Delivery Hero for more than €300 million.

Macro

Exports of non-petroleum products remained strong in the first half (H1) of 2020 despite the impact of the coronavirus pandemic on global trade, totalling €11.32 billion, marginally up from €11.28 billion in H1 2019. Agricultural products and chemicals were at the heart of Greece’s export efforts. France, Spain, and Romania grew their share of Greek exports, while exports to Turkey and the UK shrunk compared to previous years. The trade deficit reduced by €2.19 billion to €8.37 billion.

Greece’s economic sentiment index (ESI) retreated by 0.1 points M-o-M in August to settle at 90.7 points. The figure compares well to the EU average ESI which stood at 86.9 points for the month; however, it stands 18.8 points lower than August 2019. Confidence indicators across all sectors tracked by the European Commission fell on a monthly basis, with the exception of employment expectations which edged up to 105.9 points from 103.7 points in July.

COVID-19

Between August 1 and August 27, Greece reported 5,207 Covid-19 infections out of the total 9,531 recorded in the country since the start of the pandemic. The daily number of new cases appears to have reached a plateau since the initial increase at the start of August, a development attributed to stricter containment measures. Nevertheless, the authorities advise vigilance and continue to respond to outbreaks with localised measures.

Energy

The prime ministers of Greece and Bulgaria attended the signing of an agreement confirming the participation of Bulgarian state-controlled Bulgartransgaz in the Alexandroupoli LNG terminal. The floating storage and regasification unit (FRSU), in which Bulgartransgaz will own a 20% stake, is scheduled to become operational by early 2023 and will be able to pump over 5.5 billion cubic metres of natural gas each year into the markets of Southeast and Central Europe, providing a fourth natural gas import gateway through Greece.

Terna Energy has attracted new share capital of €68.5 million from foreign investors including BlackRock, Inc. and Impax Asset Management. The share capital increase is intended to fund investments into clean energy and energy storage projects in the Greek market. The offer was significantly oversubscribed and has been welcomed as a vote of confidence in the Greek green economy.

Logistics

The Piraeus Port continued its ascent up the Lloyd’s List One Hundred Ports 2020, rising to 26th place for container traffic globally in 2019, from 32nd place in 2018. Piraeus rose to first position in the Mediterranean and fourth in Europe in the same list, and retained its position in the first seven months of 2020, despite the global impact of the pandemic. Between January and July 2020, the port moved around 3.19 TEU.

A regional planning framework for Thessaloniki and Central Macedonia approved in the past week addresses the government’s latest climate change strategy and lays the groundwork for integrated industry and logistics zones, while also completing the road and rail interconnections for the Port of Thessaloniki.

Piraeus Port is the number 1 port in the Mediterranean in terms of container traffic. Copyright: Aerial-motion / Shutterstock

Start-ups

Thessaloniki-based InstaShop was acquired by DAX-listed multinational Delivery Hero for a record €305 million, the highest price paid to date for a Greek start-up. InstaShop was founded in 2015 to power home delivery services across the Middle East. The business benefitted significantly from the demand for home delivery during the COVID-19 lockdown. Congratulating the founders on Twitter, Greek Prime Minister Kyriakos Mitsotakis hailed the deal as an indication that “the start-up ecosystem continues to triumph and thrive.”

Privatisations

The virtual data rooms for DEPA Infrastructure and DEPA Commercial are due to open in the coming days for approved bidders in the second phase of the bidding. Interest in acquiring both of the state gas company’s subsidiaries has been strong. Spain’s Enagas, Australian First State Investments and Macquarie, U.S.-based KKR, Czech EPH, and Chinese private equity fund Sino-CEEF have both progressed to the second stage for 100% of DEPA Infrastructure. The approved bidders for the 65% stake in DEPA Commercial include MYTILINEOS, TERNA, Copelouzos Group, Shell, MET Group, as well as a consortium between Hellenic Petroleum and Edison, and PPC and Motor Oil.

Tourism

Hotels in some resort areas, including the Athenian Riviera, Rhodes, the Cyclades, Crete and the Argolid and Laconia in the Peloponnese, have recorded up to 100% capacity over the August peak period. Demand has been particularly strong at the luxury end of the market. However, the hospitality sector as a whole has very subdued expectations for September onwards.

Figures from the Athens and Attica hotel association show income losses of -78% in July and -62% in the period of January-July. Occupancy in Athens hotels averaged 36.5% in July despite an average price reduction of -43% percent. Over the first seven months of the year occupancy was at 39% compared to 77% in 2019. Reservations in central Athens did not exceed 30% of capacity in August, while over half of hotels in popular destinations such as Crete did not open for the season.

Cruise operator MSC Cruises has decided to push back its eastern Mediterranean schedule by a month to September 26 until diagnostic tests become available at destination ports.

Financial Sector

Greece is tightening its anti-money laundering (AML) framework with legislation due to be put to parliament in the coming weeks. The new framework expands the scope of AML controls to include more service professionals including accountants, tax advisors, auditors, lawyers, casinos and realtors engaging in transactions exceeding €10,000. The new legislation will also introduce tighter controls for virtual currency transactions, and will introduce procedures and responsibilities for transactions involving politically exposed persons (PEPs).

Banks

Alpha Bank announced €86.6 million of profits in H1 2020, after absorbing €234 million of additional provisions against the effects of COVID-19. Alpha is also on target to securitise its €10.8-billion Galaxy non-performing loan (NPL) portfolio, a transaction which when completed will reduce the bank’s NPL ratio by 13%.

Stock market

The ASE general index ended another week of sideways trading with marginal gains of 0.18% to settle 634.47 points. Alpha Bank gained 3.72% in the last day of trading thanks to its H1 results announcement.

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