ECONOMY

Investors keep preference for bank shares

Investors have long favored banks over other Athens Stock Exchange listings and this trend shows no signs of changing, with the bank sub-index rising 3.25 percent in the year’s first two sessions, compared to 2.22 percent for the general index. The banks’ attraction comes from their continued high profits and the prospects for further big changes in the sector, including the planned sales of state-held shares in ATEbank and Postal Savings Bank. The market itself benefits from the vast amounts of liquidity which lead international markets to record highs – in Greece’s case its highest level since mid-2000 but still almost 2,000 points short of the dizzying heights of the 1999 bubble market. Ever since the ASE started recovering from the depressing 41-month correction from that bubble market, the banks’ sub-index has usually outperformed the general index. In 2003, the ASE general index gained 29.5 percent and the banks sub-index 58 percent; in 2004 the gains were 23.1 percent and 44.3 percent, respectively. In 2005, this trend was interrupted: The general index gained 31.5 percent and banks 29 percent. Last year, things were back to normal, with the bank sub-index rising 23.89 percent and the general index 19.93 percent. Analysts believe that trend will continue and will even include banks that in 2006 had a mediocre year, such as National Bank (which gained just 4 percent). National’s performance came despite a spectacular acquisition, of Turkey’s Finansbank. In a few days, Finansbank’s remaining shareholders are expected to approve National Bank’s offer for their shares and National will be a very different bank from a year ago. EFG Eurobank and Alpha Bank (up 23.5 percent and 29.9 percent respectively last year) have long been investors’ favorites. Great expectations have also arisen from Piraeus Bank’s quest to by the Bank of Cyprus group. Those two banks’ shares had a spectacular 2006, rising 68.6 percent and 125.2 percent respectively.