Simple rules for stock market
The Athens Stock Exchange (ASE) continues to dance to the tune of blue chips. The stocks that present some worthy interest and turnover are limited to banks, public utilities and certain large private enterprises. The rest of the market hovers on the edge of non-existence, with low levels of transactions and even lower levels of excitement. The ASE’s new General Regulation, now nearing finalization, is supposed to provide solutions. It establishes five different types of transactions, depending on their characteristics and procedures in various sectors, each of which has a reasonable justification but taken as a whole amount to an over-regulated market. About 50 shares are trading at under 1 euro. In the USA, these would have been automatically relegated to a lower market category. There, firms have the option of reducing the number of their floating shares until the price increases. Obviously, should the company perform well, its share price will manage to stay in the upper category, otherwise, it will be relegated down again. Under this procedure, no exemptions are made; Ericsson was recently trading at under 1 dollar and hastened to reduce the number of its shares. The Greek market, suffering from an excessive number of «problematic» listed firms, needs such simple rules to get on a healthier footing. And they need to be introduced now; the ASE is still in danger of being downgraded to emerging market status by international rating agencies. The reasons are to be found in the lack of such simple rules in the daily running of the market.