Increased geopolitical and energy risk in the shadow of the conflict in the Middle East is dramatically changing the outlook for Greek equities, with JP Morgan proceeding to downgrade the Greek stock market from overweight to neutral. At the same time, it is removing Piraeus Bank from its top choices (Top 10 stocks), despite its discount compared to European banks, as it emphasizes that the risk-reward profile has deteriorated in the short term. As the American investment bank explains in its latest strategy report for CEEMEA markets, investors are no longer adequately compensated for the risk they undertake, leading to a generalized reduction in exposure to markets like Greece and other countries in the Central & Eastern Europe, Middle East, and Africa region.
Analysts warn that Greek banks have turned into a "crowded trade," meaning they are highly popular positions in the portfolios of international investors, which intensifies the risk of abrupt outflows during periods of turmoil. Simultaneously, Greece's impending transition to developed market status may reduce support from emerging market funds, which currently constitute a key pillar of demand for Greek stocks. Under these conditions, JP Morgan's stance on the Greek market is becoming more cautious and selective. The American bank leaves open the possibility of repositioning only if valuations become more attractive and the macroeconomic environment shows signs of stabilization.
Despite the fact that Greece maintains its long-term investment attractiveness, the Greek market is entering a period of increased volatility. According to analysts, risk management and careful stock selection are emerging as decisive factors for the course of investments.
The timing of the downgrade
The timing of the downgrade is also linked to the strong rally that preceded in Greek equities. With emerging markets having recorded significant gains in 2025, valuations have strengthened, leaving smaller margins to absorb a negative shock. In this environment, Greek stocks, and particularly banking ones, appear more vulnerable to a correction stemming either from rising energy costs or a deterioration in global risk appetite. It should be noted that the course of Greek equities now depends largely on exogenous factors, such as the strengthening of the dollar, the evolution of energy prices, and the overall direction of capital flows to emerging markets.
Prolonged uncertainty and energy shock with oil up to $150 per barrel
JP Morgan speaks of increased probabilities of a prolonged energy crisis due to the US-Iran conflict. The price of oil may move above $80 per barrel for most of 2026, while in negative scenarios, a spike even toward $125–$150 is not ruled out if flow through the Strait of Hormuz is seriously disrupted. High energy prices reinforce the risk of stagflation, squeeze corporate profit margins, and affect valuations in the Greek market. Analysts highlight not only the price explosion in crude oil but also in refined products, where increases are even more intense.
European natural gas has nearly doubled, while products such as diesel and jet fuel have seen prices nearly triple, intensifying inflationary pressures and burdening the operating costs of businesses. Europe appears particularly exposed, as it relies heavily on imports of energy products from the Middle East following the ban on Russian flows. This means that a prolonged supply shock can be directly transmitted to the Eurozone economy and, by extension, to the Greek market.
Lessons from the 2022 energy crisis
The experience from the 2022 energy crisis serves as a critical point of reference for the markets. At that time, the spike in energy prices was accompanied by a sharp decline in stock markets, with valuations facing stronger pressure even than corporate profits themselves. According to analysts, a similar pattern cannot be ruled out, especially if the current crisis proves more persistent than investors currently estimate. In this environment of increased uncertainty, the bank's strategy shifts toward more defensive choices. Emphasis is placed on increased exposure to the energy sector, as well as on lower-risk stocks (lower beta) that show greater resilience during periods of turmoil.
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