Companies listed on the Athens Stock Exchange (ASE), with capitalizations of more than 300 million euros are being targeted by foreign investment companies. Analysts predict that three years from now all profitable listed firms with an outward-looking attitude, satisfactory growth rates and successful managements will have been targets of acquisition by competitors, either Greek or foreign. According to the 2006 results of 307 listed firms and the prospects for the current fiscal year, stockbrokers argue that the ASE is proving to be a three-tier bourse: The first tier is made up of banks and the solid and outward-looking enterprises. The second tier includes firms representing sectors in recession, which just manage to stay afloat, and the third, companies in declining sectors that have not succeeded in improving their results and are continuously searching for buyers to rid them of their excessive debts. The Athens stock market is currently being likened to a pool of quicksand, in view of the very fast developments. The key players are the major banks, which have a combined controlling interest in Hellenic Exchanges, the ASE’s parent holding company. Their role is often negative, as they goad them away from raising cheap capital on the bourse, providing instead loans at low rates which increase their debt burden. «Banks are working in their own interests, targeting an increase in their profitability and keeping many of their client firms from raising capital on the ASE,» a stockbroker told Kathimerini. It may not be a coincidence that after the 2000 stock market crash, fear prevailed among enterprises to effect share-capital increases, on the one hand due to the 1999 bubble and, on the other, because the practice was not favored by banks. Nevertheless, it should be made clear that these have also helped the recovery of many firms, or have helped in the placements of shares with Greek and foreign institutionals. Another element that arises from developments in Greek business over the last two years is that many sound firms have struck strategic alliances with foreign partners in search of know-how, as several sectors now appear congested. These firms are seeking innovative solutions and want to be buttressed against the threats of globalization. Such developments are creating the sense among the local business community that in the coming years all sound listed Greek businesses will come under the umbrellas of multinational groups but not necessarily through the sale of majority blocks of shares. There is a widespread sense that everyone is open to buyout proposals. To be sure, in the ongoing round of acquisitions worldwide, it is not so much the fundamentals of enterprise that play an important role in the determination of costs, as the desire of central banks to dampen excessive liquidity. At the same time, in Greece, the new law on public offerings, which has lowered the holdings of basic shareholders to 33.1 percent, requires those that wish to up their stakes to submit public buyout offers for the sum of outstanding shares. This is estimated to affect 26 companies. This practically means that either the shareholders will have to have at their disposal the necessary liquidity to back a public offer, or that in the near future we shall have several buyout bids from «white» or «black» knights. Forgotten firms At the same time, some «forgotten» firms in the metals sector are working at 100 percent of production capacity and are still unable to meet the strong Asian demand for raw materials. Copper is now at an historic high of $8,000 a ton, that is, 250 percent higher than the average price over the last 10 years. Copper inventories in the London Metals Exchange represent just two days of consumption. China today accounts for 80 percent of all construction cranes on the planet. Despite an apparent fatigue in recent months, real estate prices in some regions remain at record levels. A square meter of a home in a good London neighborhood costs 15,000 euros. In the face of such realities, it is estimated that banks will continue in the next two years to rationalize their holdings in subsidiaries and investment portfolios, thereby freeing up capital for investment in SE Europe. At the same time, it is foreseen that concentration will increase in the food sector, and there will be developments in the energy sector in 2007, largely related to the degree of market deregulation. Since the beginning of the year, foreign capital that has been channeled into mid- and small-capitalization stocks is estimated at more than 1.5 billion euros. It is now obvious that foreign institutionals have turned their attention to the lower capitalizations following their establishment of their dominance of blue chips.