In what had seemed like a wasted stock year for Greece due to the fiscal nightmare of two austerity packages having to be passed by Parliament and two general elections, foreign investors have not only saved the day for the Greek bourse in 2012 but have also consolidated a considerable part of the year’s gains.
The end of November traditionally signals the end of the financial year for hedge funds and major investment firms, as December is reserved for consolidating annual gains and starting meetings for the revision of the year that is about to end and for identifying targets and choices for the year to come.
After the stock gains registered from June 5 to October 22, investors reaped their capital gains from October 22 to November 14, with the bourse’s value dropping by 3.5 billion euros after stock sales. The signing of the ministerial decision on the terms of the credit sector recapitalization gave the signal for the cashing-in process of the previous four-and-a-half months, which practically amounted to harvesting yearly gains.
Among the international firms that turned from buyers in October to sellers by mid-November were Cheuvreux, Citigroup, Morgan Stanley, Credit Suisse, UBS and JP Morgan.
Strangely enough, while foreign funds were sellers of banking stocks in that three-week period, they chose to strengthen their positions in other blue chips. The recent corporate developments in Public Gas Corporation (DEPA), Cosco and Elais-Unilever have rekindled buying interest in the local market, while the current levels of high-capitalization stocks remain particularly low.
It appears that several foreign investors are already positioning themselves in the context of the new stock index that will replace FTSE 20, the bourse’s blue-chip index, as of December 3. The new index will comprise 25 high-capitalization stocks and will be named FTSE/ATHEX Large Cap. Alongside the 20 blue chips of the FTSE 20 index there will be Terna Energy, Piraeus Port Authority (OLP), Eurobank Properties, Frigoglass, Athens Exchanges SA and Intralot.
For their part, domestic investors look forward to a substantial rebound of the stocks included in the privatization list as well as sectors that have suffered a major decline over the last four years, such as construction and information technology.
It is, however, worth noting that – as foreign investment firms inform their clients almost on a daily basis – they expect intense volatility in the Greek market due to the effort which banks will have to make in order to secure the funds required for the implementation of the necessary share capital increases. Banks aspire to draw these funds from the private sector and their stock value will be closely watched from now until April 2013, the market believes.