Sell-offs, Eurobank and bonds bolster bourse
The Athens bourse’s start to the year has been even better than the glorious period of 1999, with the benchmark index posting gains of over 10 percent in the first four sessions against a 9.8 percent rise in the same period 15 years ago.
Very swiftly and using funds left over from the last few sessions of 2013, the local stock market has once again outperformed global markets, as with just the first 10 days of the year gone, the general index at the Athinon Avenue institution has already hit 1,300 points, while international agencies had previously predicted a benchmark high of just 1,400-1,450 points for the whole of the year.
From the depths of July 2013, when the market was at the same level as that of 1989 and 1990, the index has soared over the last few months and managed to add 6 billion euros to its capitalization within just the first five sessions of 2014.
Stockbrokers describe this as technical growth, relying partly on expectations for the privatizations to take place this year in the program of state sell-off fund TAIPED. Finance Minister Yannis Stournaras’s statement this week that the country will tap the money markets in the second half of the year, issuing five-year bonds for the first time since being priced out four years ago, has also created a favorable atmosphere among Greek and foreign investors.
Another factor that has pushed stock prices up has been the entry of hedge funds (with over 240 estimated to be present in the local market) in a small group of listed companies. These are blue chips that either have a comparative advantage in the domestic market due to their activity – such as PPC, OTE, OPAP and Hellenic Petroleum – or whose activity is mostly conducted abroad and which are not affected by the local economy.
Manos Hatzidakis, chief analyst at Beta stockbrokers, explained to Kathimerini that the rise is technical as it has been cultivated while the fiscal figures of the country appear improved. At the same time, according to Hatzidakis, the expectation that Greece will return to the money markets sends a signal to foreign portfolios to secure holdings in Greek stocks and bonds as most valuations are still at low levels.
The recent bourse rise has also factored in the publication of the BlackRock report regarding the stress tests on local banks, expected within January, putting an end to rumors about the extent of the banks’ capital needs for 2014. Brokerage companies are of the opinion that the publication of the report will settle the market. Investors are also betting on a positive conclusion to Eurobank’s share capital increase in the next couple of months.
Analysts warn however that the market faces an important obstacle this year, and that is the results of the European and local elections in May.
Nikos Kafkas, also of Beta stockbrokers, notes that most purchase orders come in from abroad and head to specific stocks. “Several valuations on FTSE-25 blue chips have started showing a major rise, which means that a possible negative event in the future would lead to considerable sales,” he warns, adding that “even over the course of individual sessions there are liquidations made that constitute technical moves to register temporary gains before funds are placed again at lower levels.”
Pessimists stress that the drop in bank deposits and the increase in expired debts have created a technical bliss in the market which could be reversed at any moment, sending the bourse to considerably lower levels.
