NEWS

ASE’s long hangover

The international climate of uncertainty, due to economic stagnation and the possibility of war in Iraq, coupled with the native problems of the Greek economy, have compounded the problems of the local stock market. The problems endemic here are the problems that are beginning to show in Greek companies, excessive borrowing, the burden of fruitless investments and a lack of credibility. Three years after the mad party on the Sophocleous Street bourse, which hit its historic high of 6,355.04 points on September 17, 1999, the general index closed yesterday at 1,898.49 points, a level last seen on October 14, 1998. Ahead lies the next psychological barrier – the 1,700 points at which the general index stood when the Asian crisis had sent international markets reeling. The general index has lost 15 percent since the beginning of the year and 70 percent since its high. Investors have suffered their losses and left, along with 4,500 points and market capitalization worth 50 trillion drachmas (147 billion euros). But what is worse is that the pillars of the exchange, the large listed companies, appear to be suffering from a lack of strategy, a lack of management and a lack of cash. The Hellenic Telecommunications Organization (OTE), which has the greatest impact on the general index, has dropped to the level of its first listing and has lost 60 percent of its value since the start of the current financial year. The most critical issue is that the crisis on the stock exchange is taking on the shape of a major threat, as it is spreading to the real economy. Listed companies are under intense pressure, while brokerages appear to have reached a dead end. In the middle of all this, bankers are trying to keep their composure. One major Greek banker, with disarming frankness, «confessed» that banks are aware of the situation. «We know that we may never get back some of our loans or some parts of loans,» he said. Banks are continuing to extend loans, through readjusting and refinancing current business loans, turning them from short-term to mid-term ones while looking for additional guarantees. Bankers say that they have to keep financing companies, otherwise many of them might have to close, pulling down the system with them.