A better climate abroad and higher profits at home may help ASE recover
The Athens stock market is regaining its confidence, leading to optimism that the market will finally recover and follow a normal course. It is clear that the stabilization seen in international markets has played a role in this change of climate. Another factor is the recovery in corporate profits which have come under pressure in the last two years. Last week the benchmark share index posted a 1.55-percent increase, in line with the 1.41-percent rise recorded since October 1, a date notable because it marked the start of a period of normality. Factors which had played a major role in the downturn of Greek and global stock markets last year appear to be stabilizing. Since October 1, the Paris CAC-40 has posted a 16.32-percent jump, Frankfurt a 15.34-percent increase, New York a hike of 10.42 percent and London a rise of 10.34 percent. The Athens bourse’s rally, in contrast, has been more restrained due to a conjuncture of factors. The basic element in the change of climate in global markets has been the rally in corporate profits in the third quarter of the year. This was achieved despite the substantial devaluation of assets and securities caused by this year’s big stock market drop. Regarding the Athens stock market, encouraging results published by companies have contributed to hopes that the climate will change. With the exception of the broader financial sector including banks, investments and insurance companies, where pressure built up during the three-year-old stock market slump and its impact on their trading activities continues to be strong, all sectors of the Greek stock market showed favorable growth. In contrast, in the 27 companies in the financial index that have published nine-month results, profits have declined by an average of 46.5 percent. Despite this sharp fall, however, profits appeared to be stabilizing compared with first-half results. For the remaining 67 companies which are active principally in the trade and industrial sectors, growth has been especially favorable. Profits there have increased by an average of 60 percent.