ASE’s flagging indicators betray lack of depth and confidence

The Athens Stock Exchange (ASE) ranks among the laggards in the Federation of European Stock Exchanges (FESE, which includes bourses in EU members) in terms of a number of indices, such as stock market value in relation to GDP and trading volume per capita. The latter fell to $2,129 in 2002 from $3,518 in 2001, $5,554 in 2000 and $17,450 in 1999. In 2002, the per capita volume of trading in ASE equaled just 14 percent of the FESE average, against 19 percent in 2001 and 48.7 percent in 2000. This decline is particularly fast in relation to other bourses, indicating a serious lack of confidence; the rate of decline was 39.5 percent last year, against an 18.7 percent FESE average. In relation to 2000, the rate of decline was 75.5 percent, against a 16.2 percent FESE average. Although ASE trading volume in 2002 fell to 1997 levels, the growth of business per capita has been quite satisfactory over the last eight years, increasing fourfold from $569.4 in 1995. The rate is comparable to those of the Brussels and Lisbon bourses, but lags far behind other developed markets; in the same period, Madrid’s trading volume per capita rose from $1,377 to $15,983, Milan’s from $1,520 to $9,819 and Amsterdam’s from $7,490 to $46,140. In these bourses, the factors affecting liquidity include sizable investments from abroad and a variety of social insurance funds. In relation to GDP, trading volume at the ASE in 2002 was just 16.2 percent, against a 75.4 percent FESE average. Athens stands above only Luxembourg, Lisbon and Vienna. Paradoxes Things look rather better in terms of stock market value in relation to GDP, which stood at 47.7 percent at the end of 2002, above the respective rates of Austria, Belgium, Denmark, Italy and even Germany, where it stood at just 33.17 percent of GDP. The paradox of the divergence between the two supplementary indicators of trading volume and stock market value shows that the ASE’s main problems, inadequate liquidity and an inward-looking attitude, are not due just to circumstantial reasons, but have deeper causes reflecting little depth (lack of companies with international stature and comparative advantages that would attract foreign capital). The Athens and Vienna bourses are the only ones among the 15 to show such a divergence. Athens could cite as an excuse the big bubble of 1999, from which it is still a long way from recovering. The ASE’s general price index has declined about 72 percent in the three years since then, its stock market value as percentage of GDP has receded about 70 percent, trading volume in relation to GDP has fallen 89 percent, and the trading volume per capita has declined 88 percent. One explanation given for this is that the hundreds of thousands of investors that entered the bourse while the bubble was growing have been trapped by the crash in values and inactivated their portfolios. This could help explain one more paradox of the ASE, which appears less «speculative» than the other European bourses, given that the time-horizon of investments in it is rising compared to other markets.

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