Athens bourse hopes to become even more attractive to foreign investors

Foreign hedge funds continue to exhibit strong interest in the Greek stock market, banking on the good profit performances of Greek firms, Athens Stock Exchange (ASE) President Spyros Kapralos said yesterday. Speaking at a press briefing on the results of recent trips to the US and Cyprus – to target attracting foreign investors – he said inflows into the ASE topped 800 million euros in the first quarter of 2005, at a time when Greek investors appeared extremely subdued. During the same period, the average daily turnover was 212 million euros, against 181.5 million in 2004 and just 67.8 million euros in 2003. Kapralos said that in March, when a wave of stock sales caused the ASE to lose most of its earlier gains in the year, the sellers were mainly Greek fund managers. According to the data of the Central Securities Depositary, foreign funds account for 37.55 percent of the ASE’s total capitalization and 44.19 percent of the capitalization of the blue chip FTSE/ASE-20 index. Kapralos noted that a great number of Greek trading accounts remain dormant. Nearly half (47.6 percent) only hold one stock, 34.7 percent between two and five stocks, 11 percent between five and 10 and only 7 percent more than 10. About one-third of stock market portfolios (66.3 percent) have valuations totaling less than 3,000 euros, 15.5 percent between 3,000 and 9,000 euros, 5.8 percent between 9,000 and 15,000 euros, and 5.7 percent between 15,000 and 30,000 euros. Kapralos confirmed reports of a wide-ranging draft bill, to be tabled this summer, which will restructure trading categories, the operation of the ASE on the basis of marketability, the extent of the price fluctuations of shares and the fundamentals of listed firms. According to sources, shares will be divided into three main categories. Kapralos also said the ASE is considering listing Greek-owned oceangoing shipping firms also listed on Nasdaq, and that he plans to meet with shipowners on the subject. Meanwhile, the ASE is also looking into ways of reducing the costs of stock market transactions in order to attract more foreign funds. Closed-end funds The year 2005 looks like the year of the flight of Greek-listed closed-end investment funds from the ASE. Recently, three of them, Eurodyanamics, Exelixi and Arrow, decided to merge and then be absorbed by Proton Bank. Such moves are seen to be prompted by their high operating costs, low returns, declining share prices and inability to pay investors any dividends worth mentioning. Today, the assets of listed closed-end investment funds total 1.3 billion euros. By the end of the year, if the planned absorptions of National Securities, Greek Progress Fund, Eurodynamics, Exelixi, Arrow and Hellenic Portfolio Investment (the biggest of them all, a Piraeus Bank affiliate with assets totaling 476 million euros) are completed, this is projected to decline to just 288 million euros. Closed-end funds, unlike open-ended mutual funds, have a set number of shares trading on the stock market. Sixteen of the 19 such funds traded at discounts of between 0.41 percent and 47.9 percent of their underlying net asset value. The logic that tends to prevail among investment fund managers and their parent banks is that their assets constitute a large reservoir of untapped wealth. A bank absorbing its subsidiary closed-end investment fund acquires more capital and writes down considerable capital gains, boosting its profitability.

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