Business deals set to bolster stock market rebound this year

Investors’ expectations in the new year are focused on those stocks that led the rebound of the Athens Stock Exchange (ASE) in 2003 after three years of a sharp fall. The lack of weighty news from the corporate front may have somewhat disappointed the market, but the prevailing view is that the prerequisites are now in place for important business deals in all sectors in the new year, which entails the prospect of a favorable spill-over effect for many firms from the Olympic Games. Stockbrokers and fund managers see interest focusing on large capitalization stocks – the so-called blue chips. The FTSE/ASE-20 index led the rebound last year, as almost all available liquidity, either from external or internal sources, would find its way to blue chips. Of the 20 shares comprising the index, 17 ended the year with gains. The three that failed to do so were Hellenic Technodomiki, telecoms operator OTE and cement company Titan. Market players expect new capital to find its way to the stocks of firms likely to be involved in business deals. In the banking sector, for instance, the market is anticipating the first move from the National Bank – the country’s biggest – which is expected this month to complete the transfer of 2 percent of its share capital owned by the government to the Social Security Foundation (IKA), also the country’s biggest public pension organization. The move was expedited by the government last month as it was keen to meet its public debt target for fiscal 2003. In exchange for its holding, the government will receive from IKA bonds worth about 100 million euros, reducing public debt by that amount. The sale of a 35 percent stake in General Bank, which has a market capitalization of 167 million euros, is also expected to be completed this month. Much back-stage deliberation is reported after the three suitors, Societe Generale, Aspis Bank and Marfin Bank, submitted their bids last month. On the whole, the market seems to have laid most of its hopes for spurring the ASE out of its three-year slump on a big bank deal. But no one is really prepared to make any bets as to what will happen among the sector’s big four players, National, Alpha, Eurobank and Emporiki. In the telecoms sector, OTE and its mobile subsidiary CosmOTE are expected to monopolize all interest after the projected de-listing of Vodafone-Panafon. Investors will watch the country’s biggest utility closely, after chief executive Lefteris Antonakopoulos’s reference last fall to a plan to reduce OTE’s workforce by 3,500 over the next two years. A further point of interest is that the future of the organization is said to be a contentious issue between the economy and transport ministries. Questions still hang over one of the country’s largest Internet and alternative telecoms providers, Forthnet, which rumors say will acquire a strategic investor. Although developments are expected in the effective liberalization of the country’s energy sector, the Public Power Corporation (PPC) seems well assured of its traditional dominance, with lignite deposits projected to last more than 25 years. Management aims at the corporation’s expansion into the Balkans and cooperation with Turkey. A voluntary retirement scheme launched in 2002 is continuing. The government-controlled Athens Water & Sewerage Company (EYDAP) plans to issue an international tender for the sale of 20.9 percent to a strategic investor. The lifting of all restrictions to foreign ferry operators as of January 1 does not immediately show how it will affect the sector, but friction between Greek operators, especially Strintzis Lines and ANEK, over the Piraeus-to-Hania route, is set to continue. Packaging and strapping materials firm Maillis, already with 35 foreign subsidiaries, is reported to be preparing for expansion into the US, while Aluminium of Greece is poised for possible internal developments after the acquisition of its parent company, France’s Pechiney, by Canada’s Alcan.

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