Avoiding a new delirium

Over the last 20 days, the Athens bourse has enjoyed a sustained upward move which stands in sharp contrast to its prolonged woes. It has left behind the marginal 1,700-point threshold and is now hovering close to the 2,000-point level, mobilizing inactive account numbers and dormant investors. There are growing expectations that the market will finally escape the doldrums of the past four years. But are there any grounds for this, or is it just a product of fresh speculation? Is the recent wave of expectation justified, or does it merely serve expedient objectives, as has often happened in the past? There is no simple answer to these questions. The truth is that there are reasons to sustain at least a moderate upswing. First of all, the Sophocleous bourse went through a long period of decline, which kicked in during the autumn of 1999. It was inevitable that it would, at some point, move upward again, as the stock market price of several firms is lower than their actual value. Another reason is that the global uncertainty caused by the war in Iraq is gradually fading. This has sparked an upswing in the major US and European stock markets and has a spillover effect on Sophocleous. Also, we must take note of the rise in the market value of banks and big companies. All these, combined with the positive impact of the Olympics on the host country, is pulling the bourse out of its long standstill. However, many of the recent rumors are no more than wishful thinking. The merger between ELPE and Petrola became reality, but all the talk about Attika Bank, General Bank, Post Office Savings Banks and Egnatia Bank is nothing but scenarios. Let alone, Greece has still to carry out the necessary structural reforms. After the 1999 bust, everyone must be more cautious. For their part, the authorities must monitor the markets, which can easily recreate the traumatic delirium.

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