Greek stocks are expected to face significant outflows following MSCI Inc.’s decision to upgrade the country to developed-market status. The change, set to take effect in May, will force emerging-market trackers to sell off Greek equities, according to JPMorgan Chase & Co. strategists.
A team led by Pankaj Gupta estimates that this reclassification will trigger $5.1 billion in selling from funds benchmarked to emerging-market indexes. While developed-market trackers are projected to buy $4.8 billion in Greek stocks, the net result will still be an outflow of about $275 million.
The shift highlights the impact of index reclassifications on market flows. Although developed-market funds will increase their holdings, the selling pressure from emerging-market funds will outweigh these purchases, leaving Greek stocks with a net negative impact.