Foreign investors lead ASE growth

Foreign investors have become remarkably active on the Athens Stock Exchange recently. It is not that the participation of foreign retail and institutional investors as a percentage of the ASE’s total capitalization has changed significantly. However, they seem to be more active in transactions and have played a significant part in the rise of turnover. In July, average daily turnover on the ASE rose to 207.3 million euros, up from 198.8 million in June and 109.7 million. The average number of daily transactions was 67,858 in July, up from 65,292 in June and 48,237 in May. Interest in banks Compared to the recent past, foreign investors have shifted their interest to bank stocks – especially the two biggest banks, National and Alpha – and show considerably less interest in stocks they have traditionally preferred, such as OTE Telecom. Foreigners have also bought into telecoms but are primarily sellers in this sector, liquidating their positions. Besides banks, their interest has shifted to public companies, such as Public Power Corporation (PPC), state soccer pools and lottery firm OPAP and, to a lesser extent, Hellenic Exchanges, where the State recently sold its entire stake. Apart from reflecting foreigners’ declining interest in the telecommunications sector in general, the «abandonment» of OTE is also a result of their lack of confidence in OTE’s prospects. The disappointing flow of results and excessive risk exposure abroad, especially in Romania, are slowly but steadily eroding OTE’s credibility. On the other hand, foreign investors’ significant placements in banking sector stocks are a vote of confidence in their prospects. This was spectacularly confirmed by the banks’ first-half results. According to market experts’ estimates, recent foreign acquisitions of bank stocks were overwhelmingly of a medium- to long-term nature. This means that foreign investment firms’ positive estimates about Greek banks should hold (at least) for the second half, as well. At the same time, it is important to know that there is a widespread belief that conditions are ripe for a restructuring of the Greek banking system, which will benefit the biggest banks. Interest from Japan Market players say that, by assuring an important, stable presence by foreign investors, the ASE will take maximum advantage of international developments, which point toward a global recovery. It is clear that, beyond foreign capital investment, there is increased interest from abroad in the ASE. Experts say that the hosting of the Olympic Games next year has significantly helped put Greece into the investors’ sights. The European Union’s expansion to the east is another positive factor. As a result, there has been a recent increase in invitations to ASE officials to stage roadshows in international financial centers such as New York, London and Frankfurt. Foreign economic journals mention the ASE far more often than before. Indicative of this newfound interest is the request by a large group of institutional investors from Japan to visit the ASE. They are interested in acquainting themselves with the Greek stock market and the most important Greek corporations. The visit should take place in November. What the data say According to the latest data, foreign investors held 27.78 percent of the ASE’s total capitalization on July 31. They held a 35.57 percent share in Greek blue chips, represented in the FTSE/ASE-20 index. Their holdings of blue chips has slipped somewhat from June (37.06 percent) and May (37.11 percent). This is partly due to the fact that they hold significant positions in blue chips that have underperformed the index, such as OTE (with a rise of just 4.57 percent this year, compared to 24.41 percent for the blue chip index), Vodafone (6.8 percent), CosmOTE (8.1 percent), Motor Oil (0.29 percent), Aluminium of Greece (8 percent), Silver & Baryte (3.5 percent), Titan (which has dropped 3.8 percent) and Hellenic Technodomiki (down 13.2 percent). Comparing July 31, 2003 and May 31, 2002, when the FTSE/ASE-20 capitalization was similar (46.1 billion euros this year versus 46.5 billion at the end of May 2002), we see that foreign participation has increased to 35.57 percent from 33.35 percent. Looking at the whole market, we see that with a capitalization of 87.65 billion euros on May 31, 2002, foreign portfolios were worth 21.38 billion euros, or 24.39 percent of the total. On July 31, 2003, when capitalization was 83.72 billion euros, foreign portfolios had a total value of 23.25 billion euros, a 27.78 percent share.