Stock market needs gov’t direction

The Athens Stock Exchange (ASE) has more or less been following the trend of global markets. The stocks most in demand are those attracting the interest of foreign investors, while many others seem doomed. For the latter in particular, ASE’s recent reforms and the mandatory implementation of International Financial Reporting Standards (IFRS) seem to be sending the message: the buck stops here! They now have to provide a true picture of their finances. However important, these developments are not sufficient in themselves to give the market any direction. It is time for the government to step in and launch some initiatives. In an economy where almost 60 percent of gross domestic product is affected by decisions in the public sector, only government moves can set the direction for the stock market. To be sure, the hour has come for a further round of privatizations, which have long been announced but has still must be implemented. Placements by public companies such as gaming operator OPAP, the Athens Water Supply & Drainage Company (EYDAP) and the Public Power Corporation can set a different tone, not just for the stock market but the Greek economy as a whole. This may help ministers abandon the current stasis that is restricting them to management rather than genuine initiative taking. Evidently, there is no single solution for all cases. There are public corporations that can effect a share capital increase so that the government’s share is reduced; however, in others strategic partnerships with foreign corporations are needed. Sometimes a combination of both would be best. In any case, the key is a clear program that must be implemented. Officials should have a clear picture of what it takes by now.