Superstar hedge fund manager Kyle Bass thinks Greece is turning a corner on its decade-long debt crisis that mired the country in a depression and whacked 28 percent from GDP. The founder and chief investment officer of Hayman Capital Management, which manages an estimated $815 million in assets under management, has a good pulse reading on the Greek economy and political climate. For years he's been invested in Greek bank stocks that are trading at a quarter of book value.
According to Bass, foreign investors are waiting on the sidelines for a tectonic political shift to take place in 2018. The country is now preparing to end its international bailout program next year, with more than €320 billion (US$372 billion) in national debt. On Monday, Greece announced it will distribute 1.4 billion euros ($1.63 billion) as a social dividend to pensioners and others hit hard by the country's austerity program.
"My best guess is a snap election for prime minister will be called between April and September of next year and Prime Minister Alexis Tsipras will lose power. When that happens, there will be a massive move into the Greek stock market. Big money will flow in as investors feel more confident with a more moderate administration.
"It's going to take Kyriakos Mitsotakis, president of New Democracy, the Greek conservative party, to be voted in as prime minister to reform the culture and rekindle investor confidence," said Bass. "I have no doubt €15 billion in bank deposits will come back to Greek banks if he's elected. The stock and bond markets will also jump following the election."
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The son of Constantine Mitsotakis, the former Greek prime minister and a Stanford graduate, is the head of the strongest Greek opposition party. Over the last year, he has forged ties with the European People's Party, which consists of center-right and Christian democratic European parties. Although Mitsotakis supports cuts in government spending, he is against higher taxes, since they are hurting the flow of foreign investment.