Marketability suffers, further hampering firms

The Athens Stock Exchange (ASE) plans to categorize equities according to marketability in May. According to analysts and brokers, marketability must be one of the main goals of a listed firm, as in the long term it contributes to its ability to reduce capital costs and boosts capitalization. It is also one of the criteria looked into by institutional investors. «The marketability of the shares of listed firms needs to be improved for their prices to reach the right level,» Economy and Finance Minister Nikos Christodoulakis told the ASE-listed Firms Association on Thursday. Generally speaking, as the first quarter of 2003 draws to a close, marketability in the ASE remains at abysmally low levels. This seriously disrupts the correspondence of the share price to a firm’s fundamentals and prospects. According to ASE trading data for March, processed by Olympic Securities, the stocks topping the marketability table are either newly listed firms or companies whose shares have traditionally been traded in the thousands on a daily basis. The top two are newly listed Logismos and Sarantis, which came under heavy selling pressure by institutionals. The list also includes Newsphone Hellas and Lanaras group’s Naoussa Spinning Mills and Lannet Communications. To a large extent, marketability depends on whether a firm ensures that investors regularly receive necessary information about itself and how its business and indicators are shaping up; managers have to provide regular updates, promoting an open corporate culture and facilitating access to information for investors and analysts. But managers often appear to consider marketability of secondary importance. This can have a negative impact on a firm’s growth. If management has opted to list a firm on the stock exchange, it has to realize the importance of continual improvement in the image of its share for the latter to maintain a satisfactory price and secure a steady flow of capital for growth. For the present, however, it it clear that institutionals have opted for the role of observer, shying away from action and not wishing to provide direction; this is only to be expected at a time of international upheaval, particularly considering the ASE’s record of wide fluctuations. Buying interest in this last week of March was focused on small-caps, given their higher marketability and the fact that they lend themselves to day trading with a view to short-term profit-taking. In any case, the course of the market is fully dependent on the duration of the Iraq war. Brokers, bankers and business people all agree that war leaves the strongest of marks on the economy.

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