ECONOMY

The state must return to the stock market to boost its revenues

A peculiar relationship has developed between governmental policy and the stock market in Greece. It is true that the government has declared, in many ways, that it is unconcerned with the course of the market nor is it interested in the stock exchange’s returns. This is half of the truth. The other half is that it can only exploit the stock market in order to increase state revenues and reduce the public debt, or at least maintain it at the current levels. After all, the way the stock market is today, professionals dominate and small private investors are not expected to return in the immediate future. This means there is no near-term danger of an extreme situation developing by some sudden overheating of the market. It must, however, be taken for granted that in the next few months there will be share sales of state companies. More and more government officials seem to favor «purification» moves in state corporations, a choice that brings positive comments mainly from foreign institutionals. The expected return of the state to the stock market cannot, and will not, happen on the same terms as in the past. Today’s circumstance, however, is entirely different. Its main characteristic is the rise of blue chips, and any sign of a more active involvement by the state will only strengthen this development. The other trend which may interest private investors more is business developments in sectors and enterprises. These are certain to come as many sectors find themselves at a turning point. If at the same time there are moves for effective control and purification of the market, the landscape will change dramatically. Of course, the mobility in high-capitalization stocks creates fluidity in the market, but the big gains usually come from mid-caps.