New stock bubble fears as small-caps soar
A number of small companies’ stocks have been leading the general index of the Athens Exchange over the past month, awakening certain negative memories in many investors, as many listed firms record high returns, which are, however, not based on business moves and developments. It is the small-cap stocks that maintain investor interest now, rather than mid-caps and blue chips, for whom they are showing signs of wariness. Small-cap companies, especially those with less financial burdens, may be the target of takeovers by kindred groups. In fact, the small-cap segment includes a number of good companies which have shown a good business record. This positive sentiment on the stock market is likely to be exploited. At any rate, listed companies are well aware of the fact that they will not see their stocks move up and be attractive to investor interest unless they actually improve their profitability. The second week of June, the Athens Exchange seems to be able to withstand certain liquidations by foreign and domestic portfolios, aimed at de-escalating the market’s heat following a feverish race. Such liquidations, to consolidate recent weeks’ profits, neither had an impact on small-cap stocks exhibiting good performances. Many companies with high returns can neither be applauded for their returns or growth. On the contrary, their minimal results, or even losses, make them wary of being taken over by companies or groups that wish to use them as vehicles to float their shares on the index.
