Foreign funds taking greater interest in a more rational ASE

Mainstream European investment funds appear to be returning to the Greek stock market, lured mainly by the upbeat prospects ahead of next year’s Olympic Games and the higher growth rates in relation to the rest of Europe, investment bank UBS Warburg’s Christos Sklavounis said in an interview with Kathimerini. He noted, nevertheless, that this quite recent interest is focused on the big state-controlled blue chip firms and banks rather than the smaller public companies. The Athens Stock Exchange (ASE), which was upgraded to developed market from emerging market status two years ago, now represents just 1 percent of the turnover of European markets. Nearly 70 percent of its capitalization is accounted for by firms of the broader public sector – now privatized to varying degrees – and banks, while new listings are few. Of the flotations of the last few years, these part-privatizations represent a total value of almost 2 billion euros. Private sector flotations are valued at 1 billion euros, of which 75 percent took place in the banking sector and 25 percent was accounted for by Norwegian firm Telenor’s sale of part of its stake in mobile phone operator CosmOTE. Five of the large flotations took place under the accelerated bookbuilding method and were completed speedily, in one or two days. Sklavounis considers this encouraging, as it indicates European funds are taking a direct interest in the big Greek companies and responding promptly. He believes privatizations, which have been much more extensive in Greece in recent years compared to the rest of Europe, play «an important and positive role.» There is still considerable room for more, particularly in the banking sector. «We are now expecting the next phase of partnerships and mergers among Greek banks,» he said. This year has seen the correction of the excesses of the 1999-2000 stock market boom, Sklavounis argued. Stock markets have now returned to a more balanced and rational mode, with investors placing greater weight on firms’ fundamentals, their ability not to disappoint the expectations they create and to communicate properly with them. He believes that in the future, governments will make much greater use of fiscal instruments, such as taxes and public investment, and will greatly simplify regulations that today obstruct the economic process. «We need to exit the protectionist environment and tap the entrepreneurship and creativity of Greek enterprises,» he said.