Editor’s Note: For a more updated and in-depth analysis of the Euro bailout from Wealth Daily, click here…
The riot police in Greece have run out of tear gas.
More than a week into riots that started after the police shooting of a suburban Athens teenager, more than 4,600 tear gas canisters have been fired. Yet the Molotov cocktails keep flying.
So why am I looking for a way in?
Don’t get me wrong… I don’t plan to pull a Lord Byron here, running off to Athens to join the revolution. Instead, I see this as a prime scenario for crisis investing.
Crisis Investing in Greece
National Bank of Greece, the country’s oldest and largest lender, has suffered broken windows and even blazing fires at many of its storefront locations. Not to mention a two-day general strike that added economic insult to NBG’s injury.
Already on the ropes because of the global financial crisis, NBG had declared by mid-week that it would give generous financial help to branches damaged in the unrest…
Then the main branch in central Athens got hit on Friday.
NBG shares are listed in New York as well as in Athens, and despite the riots NYSE:NBG is actually trading at a premium to the S&P 500 over the past five days, as you see in this chart:
As it happens, the demonstrators—most of whom call themselves anarchists—are attacking both ends of the political spectrum. Over the weekend, the headquarters of Greece’s Communist Party and the Environment Ministry were firebombed.
From behind their masks, some of the protesters are saying that not only police violence but economic uncertainty sparked what became Greece’s worst riots in a generation.
European economic worries also help explain why these mass events spread to Spain, France, Denmark and even Russia over the course of the week. Those outbreaks focused on Greek consulates in many cities, but high youth unemployment and lack of confidence in leaders is a common condition.
In Greece, 25% of the population under 25 years old is unemployed, and corruption is sharpening the point of worldwide recession.
“I don’t think I know a single Greek who hasn’t bribed for something in their lives,” one peaceful protester named Sophia told the Chicago Tribune.
Confidence is the top commodity in a bear market, and you can bet it’s hard to come by. But international investors won’t spot National Bank of Greece any points for coming from a corrupt country.
Sailing the Dark Sea of Global Finance
Greece has its own problems, but graft is even more of an issue in newer European Union members like Bulgaria and Romania—both of which are served by National Bank of Greece and its partner banks.
EU leaders say former Warsaw Pact countries aren’t cleaning up quickly enough, but market growth throughout Southeast Europe has helped buffer NBG against the global credit crunch and financial crisis…
Profits in the Balkan region and Turkey almost completely offset a 13% quarterly domestic loss in NBG’s Q3 earnings report.
Nevertheless, the Greek Finance Ministry still had to lay down a 28 billion euro bailout package recently for NBG and some of its peers.
Let’s face it… Investing in financials anywhere right now is a form of crisis investing. Central bankers and the Fed have thrown up every rate cut and bailout they could as a defense against disaster, but we still seem a step away from global depression.
Many bottoms have been called, and many mavens have been proven wrong… Like the Greek riot police, international financial sheriffs seem to have run out of ammo.
The weekend revelation that top financier Bernard Madoff is a huckster extraordinaire—he took billions from banks and country club buddies alike—is but another assault on the system’s integrity and market support levels.
So I prefer to make a Greek crisis play away from sketchy money men and their institutions, in another direction.
Coca-Cola Hellenic Bottling (NYSE:CCH)
It’s better right now to capitalize on the same baseline consumer goods demand that is drawing investors to U.S. blue chips like Campbell’s (NYSE:CPB) and Wal-Mart (NYSE:WMT).
Take a look at Coca-Cola Hellenic Bottling Company (NYSE:CCH), which distributes Coke products in Greece and 27 other countries. It also rose during a tumultuous week.
I’m not gonna gloss over an ugly truth… If you take a look at the data, CCH’s balance sheet is hurting from too much debt. But that’s the story of a significant chunk of the global stock market, and the company is trying to clean things up.
Coca-Cola Hellenic just appointed a new CFO and strategy chief, in addition to increasing its market share in Italy with a major acquisition.
And to compare NBG and CCH, it just has to be easier to tally soda sales than it is to wrangle emerging market mortgage debt and fight off rioters.
So have a Coke and a smile, and try not to get hit with flying bottles if you’re in Athens.
Regards,
Sam Hopkins
Wealth Daily International Editor
P.S. – My colleague Ian Cooper is the person who introduced me to the concept of crisis investing. It’s not about being cynical and profiting from the misery of others, it’s about investing in solutions and being willing to take downside profits when you see companies make the wrong moves. His Options Trading Pit is, quite frankly, the best way you’ll find to make money in a topsy-turvy market. Ian’s OTP subscribers have already taken gain after gain from banking sector blunders and recovery upside swings alike. Don’t miss the next OTP trade… click here to find out more today.
