Key question for the ASE

Despite improvements in recent years, the Greek stock market still needs more reform to inspire greater confidence among investors. As market professionals remain unresponsive, it is time to pose a crucial question: What kind of stock market do we want? The biggest part of the trading volume at the Athens Stock Exchange (ASE) today is accounted for by a relative few, mainly foreign instutional investors, and concerns a small number of stocks. This dismal reality hides another, even less appealing aspect; these blue chips are too small compared with those of other developed markets. For these investors, the important element in a stock is its free-floating capitalization. On the basis of this criterion, the biggest Greek listed firm is Alpha Bank, which is ranked 209th in Europe. OTE Telecom is next, in 210th place. National Bank of Greece, the country’s biggest, is in 233rd, EFG Eurobank Ergasias is 253rd and the Public Power Corporation, in which the government still holds a majority control, is 350th. This is the ranking which foreign institutionals monitoring stocks throughout Europe see – not the relative size of these companies in Greece itself. The truth is that Greek companies are small and the ASE is not notably friendly to big investors. The cost of transactions is high, legislation is not flexible, and the market is shallow. The current interest of foreign investors is likely to dissipate if the obvious changes do not materialize, as they stand to lose very little if they liquidate their positions and take their money elsewhere. The changes being discussed in recent months have to be introduced fast. The stock market cannot remain hostage to the petty interests of market professionals or to personal ambitions.

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