The era of the independent portfolio investment companies seems to be drawing to an end. Most of the big companies in the sector have already been absorbed by the large banks, whose subsidiaries they already were, and more are to follow. And in a first for Greece, a listed company, P&K Investments, was liquidated. Market insiders predict that other firms in the sector will withdraw from the stock market. They say bank subsidiaries will not escape that trend because the banks are searching to minimize risk and an investment firm at a time of market stagnation constitutes a major risk. In any case, banks are paying more attention to strengthening their capital adequacy, hence the absorption of subsidiaries, but at the same time, their investments in portfolio investment firms are not profitable. In these conditions, the investment sector’s weakening and shrinking is deemed inevitable. Portfolio managers attribute this situation partly to the law – voted in the early 1990s – concerning investment firms’ operation, blaming it for a lack of flexibility. On the other hand, they say, if investment firms were able to transform themselves into other kinds of investment vehicles, such as hedge funds, this would be of benefit. Others analysts, however, object that the Greek market is not broad enough to allow such vehicles to operate successfully. The investment sector is declining, says Capital Market Commission (CMC) Chairman Alexis Pilavios, not only in Greece but internationally. He adds that the CMC, for the time being, is not considering a change in the existing law on the operation of such firms. Even though the domestic market is languishing, Greek investors have not diverted their capital to foreign markets. But this may well be a seasonal phenomenon: Most other markets also show diminished trading volumes during the summer. Kathimerini asked three top investment managers for their views on the prospects of the stock market, investment firms, as well as international developments. Giorgos Efstratiadis, managing director at Marfin Group’s Global Asset Management: It is a fact that the investment sector is shrinking, as banks are absorbing their subsidiaries. The firms no longer interest investors, because their main attraction, the dividend, is gradually vanishing, since due to the conditions on the Athens Stock Exchange, investment firms are no longer profitable. There might be an increase in interest in investment stocks if the discount level rises above 20 percent. However, even this development will not change much. We also expect mergers in the mutual funds sector. Especially if the Capital Market Commission allows mutual fund management firms to manage private portfolios; then a round of mergers between mutual fund firms and brokerages will begin. Nikos Chloros, manager, Foreign Mutual Funds, Alpha Trust: The main feature of European markets is their limited fluctuation, due to the fact that corporate profits are not expected to change much, at least during the next year. For example, last year, foreign institutionals forecast – and this was reflected in the various stock markets – that corporate profits will begin rising again, a forecast that was confirmed, since first-half profits rose 15-20 percent, depending on the country. At this moment, the future trend depends on consumers, who, at the moment, appear wary and prefer to save rather than spend or invest. The paradox is that, during the previous years, when markets were in a bad shape, consumers were active spenders and investors; in the last year, a year of recovery, consumers are on the sidelines, with the exception of the US. Andreas Papaspyrou, managing director of P&K Investments: The catalyst in the decline of global markets is the great rise in oil prices and the continuing tension in Iraq, two related events. A drop in the price of oil would provide breathing space to markets. At present, conditions and investment opportunities do exist. I think investment should be limited and careful… I think the market will not easily get out of the 2,200-2,500-point boundary it is locked in.