The first four months of 2002 have been disappointing for the Athens Stock Exchange. During that period the composite index fell 373.21 points, or 14.40 percent, and all other indices have headed the same way. The composite index’s performance is the third-worst among the world’s mature markets, which the ASE supposedly joined on May 31, 2001. This regression has gravely disappointed ASE officials, brokers and investors, all of whom had hoped that the protracted slide that began in mid-September 1999 would be stopped this year. After all, the index had fallen over 59 percent from its 1999 high by the end of 2001. The hopes raised by the announced merger of Greece’s two biggest banks, National and Alpha, helped preserve a climate of optimism at the ASE until the end of January, when it became apparent that the merger had collapsed. The precipitous decline in banks’ profits during the first quarter of 2002 was another severe blow to the market, since the banks proved to be highly vulnerable to market fluctuations, and unable to compensate lost profits from market transactions with additional profits generated by retail banking. There was also a dearth of company news during the first four months of the year: very few mergers and almost no new investment schemes. This led institutional investors to restructure their portfolios so as to give more weight to volatile shares that can provide quick profits, independent of the course of the general index. Bemused market officials claim they have done everything to strengthen the market and make it a reliable and attractive option for investors. Their efforts include introducing market makers that help guide newly listed stocks. International experience, however, shows that the market reflects developments in the macro- and micro-economy. The very serious delays in the privatization program have negatively affected investor sentiment; moreover, investors increasingly sense that the window of opportunity for reforms is closing fast for the Simitis government, which henceforth will be forced to operate in a negative political climate on which domestic political developments and the anaemic global economic recovery inevitably weigh. There is, however, some room for optimism amid all this bleakness. A considerable number of shares, more than 50, are doing better than last year. This is no indication of a trend reversal, but investors increasingly pick and choose the best performers, those that will add value to their portfolios and those that will provide a good dividend at a time when real deposit rates have turned negative. Worst hit were insurance companies, which retreated 39.76 percent. This reflects poor quarterly results as well as a real survival problem faced by many companies in the sector. On the other hand, the fewest losses were seen in non-metallic minerals and cement (3.89 percent) and construction (5.04 percent), both sectors where mergers have been taking place.