Foreign institutionals are not always right on Greek stocks

Foreign investment houses have scored some impressive successes but also equally impressive failures in their forecasts regarding the performance of the Greek stock market and individual stocks. To be sure, their reports are often seen as reference points for investors and thereby influence the pace of business on the Athens Stock Exchange (ASE). A comprehensive comparison of forecasts with the ASE’s actual performance shows that foreign analysts tend to overvalue and that they are often off the mark. Indeed, the revisions of recommendations for individual stocks by particular investment houses are so frequent and contradictory that they remind one of the spasmodic moves of some small-scale investor who tends to operate on sentiment, rather than that of the cool-headed evaluations of a professional. Their analyses have often come under fire and Greek market players have even accused them of serving expediencies. This was especially noted after the resounding failure of their forecasts on foreign indirect investment inflows after the upgrade of the ASE into a mature market in 2001 and the sudden collapse of bank stocks in 2002. In actual fact, foreign investment houses do not really busy themselves much with Greek stock market affairs and certainly less than many would believe. With the exception of a few stocks, they neither monitor regularly nor examine in depth Greek business and economic developments. The Greek market is very small, Greek firms are of a disappointingly small size and work with outdated structures, while few foreign institutionals take any interest in the ASE. The problem was highlighted after the ASE’s upgrade, as it came face-to-face with the large European markets with which it cannot really compare. Few Greek stocks are targeted by foreign houses. Most of those are blue chips but they also include some small-capitalization shares. OTE Telecom certainly garners greater interest than any other, due to its size and the sector. It is also one of the few that shows satisfactory marketability according to foreign standards. In the 2001-2003 period, there were more than 80 reports or revisions by foreign investment houses on OTE and the prospects of its stock. They include Morgan Stanley, Merrill Lynch, Salomon Smith Barney, Credit Suisse First Boston, Dresdner Bank, JP Morgan, ABN, Lehman Brothers, HSBC, UBS, Commerzbank, Deutsche Bank, Goldman Sachs, Citigroup and Societe Generale. National Bank has attracted about 55 reports since July 2001. In third place, with about 45 reports each, are Alpha Bank and OTE’s mobile telephony subsidiary CosmOTE – a favorite Greek option of foreign institutional investors. In the same period, there have been about 30 reports on Coca-Cola Hellenic Bottling Co and 25 on Titan cement. Regarding the relative newcomers to the ASE, sports betting and lottery operator OPAP, another favorite, has attracted about 25 reports since August 2002, of which 18 were in 2003. The Public Power Corporation and its stock was the subject of 11 reports in 2003. Relatively strong interest has also been shown in Piraeus Bank. Other firms of a smaller size that have attracted interest are Folli Follie, Chipita and Intralot. Despite the low interest of foreign investment banks in Greek stocks, the funds they manage are so large that they can have a decisive impact on the ASE’s daily business. Even minor movements of funds can overturn a picture, affecting volume and valuations.

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