Decline continues in local stock market

The Athens bourse experienced its fifth successive week of losses to its main index, ending on Friday with a weekly decline of 3.75 percent, as the huge pressure on the banking index did not allow the market to stage a rebound at any point. The Athens Exchange (ATHEX) general index closed last Friday at 1,436.66 points, down from the previous week’s closing at 1,492.67 points. From the start of the year it has declined by 34.58 percent. Small caps were the worst hit, with their FTSE/ATHEX 80 index dropping by 7.51 percent on a weekly basis. Daily turnover averaged at 94.1 million euros last week, up from 81.7 million euros the previous week. The index is on a streak of six declining sessions, as most stocks have gone back to levels unseen since the spring of 1998 – that is before Greece’s entry in the Economic and Monetary Union. Observers fear that the general index may well threaten the lowest point of this year, which was 1,383.01 points on June 8. Citigroup stated in a report that the prospects of the Greek market are negative, advising investors to sell in Greece. Citi has included Greece among the least attractive European markets, along with Portugal, Ireland and Belgium. However, an Emporiki Bank report argues that although the psychologically important level of 1,450 points was lost, the declining sessions have not come with a significant increase in transaction volume, which reduces the chances of the appearance of a strong declining trend. The atmosphere is particularly negative for the governing boards of listed companies, as criticism and calls for tough measures are often heard in board meetings. Companies must make swift decisions before the end of the year regarding the possible sale of subsidiaries in Greece or abroad, or about transferring their domicile to deal with the high taxation in earnings and dividends. Most listed companies are stressing to their shareholders that their priority at the moment is to reduce costs in every possible way (through layoffs, investment freezes, shrinking of production lines etc). On the other hand, when there are no discussions about cuts in the annual salaries of governing board members, shareholders respond with anger.