What do foreign investors risk in Greece’s market?
Foreign institutionals are virtually the only active investors in the Greek stock market and this is the reason why volume is satisfactory only in the shares they are interested in. And it is certain that their presence transmits a measure of calm to the economy at large. But an important question is what foreign investors see that the Greeks do not. First, foreigners have liquidity and a capacity to borrow even more. Moreover, the Greek market is shallow and a relatively small part of their investment funds suffices to prop up the index of the Athens bourse. Also, as part of their overall investment strategy, they can hedge the risks they undertake with parallel moves in the derivatives market. Besides, they only invest in big established companies with promising profitability prospects. But, as always, there is something more; these organizations do not just manage capital assets. Most seek to tap business in the domain of government bonds, privatizations, the floating of public enterprises on the stock market and participation in public/private partnerships in utility projects. They aspire to staying active in the Greek market because they hope to win projects from which they will profit without risk. They assess that the government will issue such tenders quite soon and want to be present when this happens. This is the biggest risk they undertake.
