Bailed-out Greece is luring back foreign investors betting on more gains in its bank-dominated stock market and an eventual economic recovery.
Athens remains a market more for the likes of hedge funds than mainstream foreign investors, and some fund managers say Greece will take time to shake off its reputation for being bust.
Nevertheless, the benchmark Athens Stock Exchange General Index, one of Europe's smallest by market capitalisation, is up 24% since the start of 2013, beating gains of 15% on Germany's DAX and 11% on the pan-European FTSEurofirst 300 index.
Share trading by foreign investors on the exchange has jumped to about 50% of turnover from a low of just over 20% in 2012 at the height of the Greek debt crisis.
After a six-year slump, the government is forecasting a return to economic growth in 2014. The stock market is still worth 20% less than before the crisis, and investors are snapping up stocks that should benefit from a recovery, from banks to telecoms.
Clairinvest fund manager Ion-Marc Valahu, whose holdings include Hellenic Telecom (OTE) and gaming group OPAP, said many mainstream pension funds were unwilling to enter a market they still regard as too risky.
Yet U.S investment bank Citigroup wrote in a research note this week that it felt "the worst is behind us" after meeting major Greek banks and policymakers.
"We see signs that things are getting better," Athens Exchange Chief Operating Officer Dimitris Karaiskakis said at a Marketforce conference in London this week.
Greece is also due to join the MSCI emerging markets index in November, which would open it up to funds benchmarked to that index.
Betting on the Athens stock exchange is mostly a play on a recovery in Greek banks, which comprise about 40% of the benchmark index, compared with 20% in 2012, following Coca Cola Hellenic's decision to move its primary listing from Athens to the bigger FTSE 100.
Greek banks underwent huge upheaval during the economic slump, leaving three main players – Piraeus, National Bank of Greece and Alpha, all of which are largely owned by a bailout fund. The fourth bailed out bank, Eurobank, is almost entirely owned by the Hellenic Financial Stability Fund (HFSF).
The banks are still burdened with bad debts as a result of the crisis, which also led to a drop in deposits as money fled the country.
Still, the FTSE Greek Banking Index has risen about 60% since July as the sector has been buoyed by injections of capital from HFSF.
Weekly trading volumes on the Athens bourse have picked up, reaching a peak so far in 2013 of 678 mln shares, up from a high of around 400 mln in 2012.
