Greek stocks are up by 29% in 2023, beating the rest of the world.

And they could get hotter for the rest of the year following a landslide victory of the New Democracy (ND) party in the May 21st elections.

ND received 40.8% of the votes, more than 20-basis ahead of the Syriza party, which received 20.1%.

"Syriza's failed economic model has little appeal for Greeks who are now seeing the fruit of long-term investments into the future as opposed to the tried and failed 'take from the rich and give to the poor' attitude by Syriza which brought about the need for austerity measures rather than any kind of improvement," geopolitical analyst Irina Tsukerman told International Business Times. "The lesson here is parties cannot merely win elections based on smear campaigns, scandals and empty promises. They need to have a record of achievement and answer to the current needs of the electorates, not merely to dubious ideological aspirations."

"The results of the Greek elections showed a unique U-turn in Greek peoples' way of thinking," Fanis Matsopoulos, counselor at Athens Chamber of Commerce and Industry, told IBT. "New Democracy's percentage is a crystal-clear message that citizens — despite the difficulties that they faced during the last four-year period, which included the pandemic, the immigration issues and currently, inflationary pressures — recognized Kyriakos Mitsotakis' and his cabinet's efforts to stabilize the economy and secure social cohesion."

The solid victory of ND was music to the ears of traders and investors, as the center-right party is more accommodative to markets than the left-wing party of Syriza. Thus, a big jump in equity shares on Monday in Athens. They sent the market index up by 6%, with an unusually high volume of 360 million euros.

Greek equities got a boost from the continued decline in the country's sovereign debt yields, which have dipped below 4% in recent weeks.

Debt markets are betting that the landslide victory of the ND party signals a continuation of the economic forms of the last four years. They have brought Greek debt closer to investment grade.

"The outcome reflects confidence among voters in the government's reform of the economy, which, after a remarkable recovery from the debt crisis, is now on the verge of reaching investment grade," Ben Halliday, Europe analyst in Sibylline's Global Intelligence Team, told IBT. "The re-election of New Democracy would almost certainly see a continuation of the pro-business and structural economic reforms that markets have so welcomed."

Colt Agar, marketing researcher at Bizpedia, sees the improvement in the Greek debt market sentiment as positive for equities. "The prospective investment-grade rating, positive primary balance and long maturity of Greek debt certainly contribute to the appeal," he told IBT. "Goldman Sachs' forecast for a decrease in the debt-to-GDP ratio over the next three years also signals increased financial stability."

Matsopoulos agrees. "If Greece maintains fiscal discipline and achieves a primary surplus as it has already done for the fiscal year 2022, the cost of borrowing will allow the country to refinance its debt on favorable terms and free up fiscal space for adopting growth policies," he explained.

That could be a tailwind for Greek equities. "Achieving this goal will unlock the Greek market to international funds that until now stayed away from the Greek debt securities due to restrictions they face in their statutes that prohibit them from investing in countries that do not hold the investment grade," Matsopoulos said. "At the same time, it will improve the financing conditions of Greek businesses and especially banks, which jumped 15% on Monday."

Despite the big run-up, Matsopoulos thinks that Greek stocks are still inexpensive. "The fundamentals of Greek companies are setting consecutive records which, however, so far have not been reflected in the stock prices, as a result of which many key indicators such as PE are at single-digit levels," he added.

Agar is skeptical, warning investors of the potential risks. "For instance, Greece's recovery is heavily dependent on the broader European and global economic climate, which can be unpredictable," he said.

"Moreover, the Greek Stock Market, like any other, comprises a diverse range of sectors and companies. Therefore, potential investors should delve deeper into these opportunities and not just base their decision on broad market trends," Agar added.

Greece is enjoying a rare respite from economic instability under Kyriakos Mitsotakis