Extensive restructuring at ASE

The Athens Stock Exchange (ASE) will submit its final proposal on a revision of its regulation to the Capital Market Commission by the end of August. On Thursday afternoon, the ASE board members decided to set up a regulation revision commission, to be made up of representatives of brokerages, listed companies, institutional investors and Greek banks. The new regulations will restructure the ASE, creating new market categories and abolishing the main and parallel markets as well as the ill-fated New Exchange (NEHA). The ASE’s president, Spyros Kapralos, wants to make the ASE more attractive to foreign investors and prepare it for a possible merger wave that is certain to affect European exchanges. According to Kapralos, a new «International Market,» as it will most likely be called, will replace the existing main market beginning in autumn. This new market will include the stocks currently comprising the FTSE/ASE-20 index of blue chips plus selected medium- and small-capitalization stocks. The rest of the shares will be traded in the new Main Market. Kapralos says he wants to include about 80 listed firms in the International Market and that these must have a capitalization in excess of 100 million euros. At present, this latter criterion is fulfilled by all blue chips, almost all of those comprising the current FTSE/ASE Mid 40, but very few of those comprising the FTSE/ASE Small-Cap 80 index. Capitalization is not going to be the only, or even the main, criterion in including a firm in this top-tier market. Having the necessary number of shares to meet it is not enough. The key is trading volume. Low trading volume means the stock can easily be manipulated. Low stock dispersion also leads to the same result. Recently, many enterprise owners have come round to appreciate the benefits of stock dispersion and have placed more of their shares into the market, in order to see them enter the portfolios of Greek and foreign institutional investors. Such a decision means the company must provide road shows in order to raise the interest of foreign funds with enough liquidity to get interest in the stock market. According to data on trading volume from the first half of the year, National and Alpha Bank top the lists, something not unexpected given their capitalization. In third phase, we find betting agency OPAP, the largest of its kind in Europe. Prospects of its privatization – with the sale of the new stake, the state will no longer hold the majority of shares – and its profitability have whetted investors’ appetite. High up the list of the most heavily traded stocks is Hellenic Exchanges, ASE’s parent company. We also find firms with an export orientation, such as battery maker and electronics retailer Germanos, Titan Cement, jeweler Folli-Follie and Neochimiki.

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