ECONOMY

A rosy view of the economy and bourse after the Games, with rising investment

The Greek stock market operates within a healthy, competitive and transparent framework and will soon benefit from the recovery under way in the world economy, Iakovos Georganas, president of Hellenic Exchanges, the holding parent company of the Athens Stock Exchange said yesterday. Addressing the Athens Business Club 2004, the forum designed to forge contacts between Greek and foreign businessmen during the Olympics, Georganas said the Olympics represent a great opportunity for the development of the Greek economy and the promotion of the country’s profile. He noted that foreign institutional investors already account for about 35 percent of the total capitalization of the FTSE/ASE-20 blue chip index. He ended his speech with a question to Deputy Minister of Economy and Finance Petros Doukas, who spoke after him: «How does the government plan to tackle the high public deficit?» Doukas said the government’s plans include tax reform without reducing public revenues, holding down the deficit and military spending, cutting red tape, acceleration of privatizations, attracting private investment to public projects, bolstering the role of the stock market in investment and modernizing the labor market with a view to boosting employment. US Senator Paul Sarbanes said Greeks can look with optimism toward the future, provided they tap their heritage, the country’s geographical and physical attributes, and the success of the Olympic Games and their inherent qualities. He expressed confidence that the Olympics will provide a strong boost to the economy and the city of Athens, as was the case with Barcelona and Sydney. Other speakers on the whole appeared to agree with projections that improvements to infrastructure in Greece will continue in coming years and that the new government’s policy will help promote new investment in tourism, energy, manufacturing, transport, telecommunications and the financial sector. Alpha Bank’s manager of research and investor relations, Michalis Masourakis, said investment in new infrastructure projects in the 2005-2008 period is estimated at 30 billion euros, of which a considerable part will be EU-subsidized. Further, he noted the prospects for the growth of the tourism industry after the Games, the potential for the expansion of the construction sector to neighboring Balkan countries with the considerable know-how it has acquired in recent years, along with prospects for the development of real estate and the expansion of other Greek companies in the Balkans. Regarding the banking sector, Masourakis predicted that credit expansion will continue at rates considerably higher than elsewhere in the eurozone, interest rates will come under pressure but profit margins will remain about the same for the large banks. He said, given the relatively small size of Greek banks, new mergers in the sector are unavoidable, though it is uncertain when and that labor legislation is a hindering factor. Finally, he noted that Greek banks have a strong capital base despite not having fully tapped various new financial instruments, such as securitization.