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Dec 6 2017

Greek ETF set for another high-volume session #etf #greece


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Greek ETF set for another high-volume session

An exchange-traded fund that tracks 20 publicly traded Greek companies is set for another high-volume session on Monday.

GREK GREK, -0.47% — also known as the Global X FTSE Greece 20 ETF — is poised to be thrust back into the spotlight when investors respond to the rejection by Greek voters of reform proposals wanted by the debt-crippled country’s creditors.

It was just last Monday that the NYSE-listed ETF notched its busiest day on record. Volume rocketed up to more than five times its daily average, with 6.2 million shares changing hands, after talks between Greece and its creditors rapidly disintegrated over the previous weekend. European equity markets were slammed ahead of Wall Street’s open that Monday morning, as Greek banks were closed and trading in Greek stocks GD, +0.45% was suspended in Athens.

“You tend to see more volume on bigger down days than on bigger up days,” said Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital.

Given that, activity in the ETF after the referendum will come down to whether the markets like the outcome of the Greek referendum. But it may still be hard to top last Monday’s surge, Bajaj added. European SXXP, +0.95% and Asian equity investors displayed their distaste for the referendum’s outcome ahead of Wall Street’s open. More than 61% of Greeks on Sunday voted “no” to a June 25 proposal from the country’s international creditors. Creditors had withdrawn the proposal ahead of the vote.

The GREK fund, which will mark its fourth year in December, finished Wall Street’s holiday-shortened week on Thursday with a 7.9% loss, its biggest weekly drop in nearly three months. So far this year, it’s declined 19%.

Coca-Cola HBC AG CCH, +1.87% EEE, +1.46% CCHGY, +1.30% is the largest holding in GREK. The Hellenic bottler accounts for 21.4% of the ETF’s value. Financials hold the biggest sector weighting, at about 24%.

Investors were able to run to the U.S.-listed security after Athens trading was put on hold and as the Lyxor ETF FTSE Athex 20 was halted on some European exchanges.

Despite the higher profile of late for GREK, Bajaj doesn’t expect more Greece-centered ETFs coming online. He noted that GREK has just $322 million in assets under management. “So it’s not terribly big, and it hasn’t proven there’s a huge appetite for the product in the market,” he said. Also, when there are underlying components that have been closed — albeit temporarily — managing such a portfolio “becomes cumbersome.”

Still, investors will keep a wary watch on GREK as long as Greece’s debt drama drags on. “People just want to get a solution, one way or another,” said Bajaj.

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