Refineries (up 60.51 percent), information technology firms (up 50.18 percent) and wholesalers (up 50.13 percent) outperformed on the Athens Stock Exchange (ASE) in 2005, helping the Greek market to capture the second spot among eurozone bourses, behind that of Austria. The ASE general index closed the year with gains of 31.5 percent. All sectoral indices finished higher, except for publishing and printing, which lost 0.48 percent from 2004. Big banks’ profits continued to show great increases in 2005, with mortgage and consumer credit growing at double percentage digits. The high degree of banks’ penetration into the countries of Central and Eastern Europe and the Balkans promises high profit growth rates for the future, too. The Athens bourse’s rally is attributed to the trust shown by foreign portfolios throughout the year and to expectations for new business deals in the banking, energy, metals and trade sectors within 2006. Another factor may have been the new method of valuating subsidiaries via international financial reporting standards, as the valuation of listed groups’ subsidiaries was based on the price of their stock on the last day of the year and not on the average December price, as it used to be. Among blue chips, there were only a few stocks to close the year with losses, while the other 68 ended with profits reaching up to 214.5 percent (the Marfin Group). Second in gains was Info-Quest with 203.3 percent and third was Aluminium of Greece with 187.55 percent. Among mid-cap and small-cap stocks, 125 ended the year with gains, led by Altec (340.91 percent). Rainbow was a distant second with 155.84 percent, just above Livanis with 154.79 percent. In the Financial Times indexes, the FTSE/ASE-40 led with gains of 47.3 percent, followed by the small-cap index with a rise of 31.62 percent, while the blue chip index, which has outperformed the last couple of years, recorded an increase of 30.19 percent in 2005. The FTSE/ASE-140, which includes all three of the above indices, had an annual yield of 32.14 percent. Notably the rise of the general index above 3,600 points, especially for the last month of the year, does not reflect the real picture of the Athens market, as the profits from the rise are only spread across blue chips. The situation has for months now been problematic for mid-cap and small-cap stocks. The reasons for this are low marketability, the bad financial straits of most companies, lack of corporate developments and indifference from the broader investment public. Compared with Europe (STOXX-600) and the US (S&P 500), Greek enterprises on average borrow more (twice their EBITDA against borrowing just their EBITDA) and have smaller EBITDA margins (by about 4 percentage points). Small-capitalization appears more vulnerable as the net profit margins are the lowest and the financial costs per sales the highest. Large-capitalization, on the other hand, with net profit margins at about 6 percent and financial costs below 2 percent of sales has the capacity to absorb greater pressures. Significant developments are expected in 2006 in telecommunications and metals, wholesale and retail commerce, in energy and in property management. During 2005, the stock market saw considerable clearing among the 376 listed firms. The market has provided its own assessment of companies, taking into account their fundamental figures, their management and prospects for further healthy growth. This process is expected to continue in 2006 with profit-making companies gathering the investment interest of local and international portfolios.