US asset manager Russell Investments has reclassified Greece from a developed to an emerging market, claiming the nation has been a “world concern” since it revealed unsustainable levels of debt in 2009.
According to The Telegraph, Russell says Greece has been on a downward spiral towards the new status since 2010.
The fund manager, which designated Greece a developed nation in 2001, says Greece failed a number of operational and macro tests, including per-capita income, total market capitalisation and the level of trading volume, all of which determine the economic health of the nation.
The move will mean managers at Russell will have to buy and sell shares to align holdings in their funds to the new criteria in the wake of the reclassification.
Russell senior research analyst Mat Lystra says: “Since the country began revealing unsustainable levels of public debt in 2009, it has been in an unfortunate economic tailspin that at times has threatened to pull apart the entire European Monetary Union. Any opportunities in the Greek economy have become inherently riskier exposures for global investors”.
“During our 2013 global market risk reviews, when we again evaluated the two risk profiles, Greece failed both tests.”
European Union and the International Monetary Fund officials return to Athens this weekend to assess Greece’s performance under a bailout plan as the government plays down the prospect of public sector job cuts.