OPINION

Sinking stock market

The Athens Stock Exchange general index has precipitously plunged to the levels last seen in 1998, that is shortly before the stock bubble and the investor paroxysm which caused the index to skyrocket to 6,355 points – in relation to the 1,898.49 yesterday. Unfortunately, however, things are far worse than they were four years ago. In contrast to 1998, a large number of firms listed on the bourse have huge debts, while many of the bigger firms are faced with serious financial problems. Furthermore, four years ago, and despite the crisis in Asia the previous year, there was still the hope – which was afterward appallingly fulfilled – that ordinary people would place their confidence in the market, functioning as a source of free capital to meet companies’ financial obligations and development plans. Today, public confidence is in tatters. The image of the stock market has taken a beating while people’s faith in it has evaporated. The majority of firms made poor use of – or even wasted – trillions of drachmas that were invested by hundreds of thousands of small investors, mostly amateurs. Crippled public sentiment has dried up new capital while the hordes of people who have been trapped in the bourse (as they purchased shares whose value has shrunk by 50, 70 or even 90 percent ever since) are ready to liquidate tens of millions of stocks en masse should there be any prospect of getting back some of their original capital – a move that would immediately annul any nascent upswing. The mass liquidation of tens of thousands of stocks by key shareholders in large firms has also undermined the appeal of the Athens bourse. When the prices of shares in the Public Power Corporation (PPC) – a company which still enjoys a semi-monopoly position – are falling, how can investors hope for an upsurge? Greece, of course, is not the only country faced with stock market woes. All European states are witnessing a bear market, more or less. The period of «irrational euphoria» is history. The dashed hopes of the New Economy, the deep crisis in the telecommunications sector, the inexpressible scandals plaguing Enron-type firms (similar scandals, although on a smaller scale, are to be seen in Greece as well) have plunged the world markets into crisis – a situation for which companies bear the main share of blame.