ECONOMY

Foreign investors predominate in rising stock market

In the first 17 sessions of the year at the Athens Stock Exchange, the general index has gained 5.83 percent. As a result, Greece’s stock market is among the highest-performing mature markets so far this year. The rise has been mostly fueled by foreign institutional investor portfolios. Many foreign institutionals had the foresight to enter the market last March, when the index was hovering below 1,500 points and just completing a 42-month-long falling cycle. Since its low of 1,464.70 points, achieved on March 31, the index has risen 66.95 percent to close at 2,445.38 points yesterday. Earlier this month it even briefly flirted with the 2,500-point level. This means that many foreign institutionals are now thinking of cashing in their gains and are looking for opportunities to do so. The first serious opportunity arose on Monday, with the government mired in controversy because of an amendment submitted last week by Deputy Economy Minister Christos Pachtas, which appears to have been tailored to the designs of a single businessman. Pachtas’s forced resignation and the decision to exclude nine other MPs of the ruling Socialists from the list of candidates to the March 7 national election shocked markets. Closer to home, the government’s decision to appoint Alexandros Vousvounis, deputy chairman of the Capital Market Commission, to succeed chairman Stavros Thomadakis on February 2 for a five-year term provided yet another controversy to hurt the market. Naturally enough, the market shed 2.03 percent on Monday but bounced back yesterday, gaining 0.49 percent. This development shows that the ASE did not panic when political controversy arose; far from it. Foreign institutionals, who control the flow in blue chips, are not as likely to be impressed by domestic political developments. Domestic institutionals, by and large, imitate the foreigners’ behavior. Besides, they seem to have channeled more funds to blue chips and mid-caps recently. How about retail investors? They seem to be gingerly feeling their way back, although at the moment they are more curious as to whether the rally is sustainable. They want to be assured that everything works properly in the market and are not going to fall victims to wily speculators promising quick gains. Among FTSE/ASE-20 component stocks, the biggest rise this year has been by metals group Viohalco (18.46 percent), which had failed to follow the rally thus far. National Bank has risen 16.68 percent, to nearly two-year highs. Hellenic Petroleum (14.94 percent) and Intracom (12.64 percent) follow.