New Analysis: New found optimism on Athens stock market expects to carry on
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E-mail Xinhua, December 12, 2012
The Athens Stock Exchange (ASE) has shown remarkably strong resilience during 2012 to a generally ailing economy in recession-hit Greece and the positive upward trend is expected to continue into next year, according to local analysts.
The Athens stock market held stable over the past few months, following one of its worst years over the last two decades in 2011 with shares posting some 30-billion-euro (39 billion U.S. dollars) losses, accounting for a declining yield of about 60 percent.
Particularly after June's general elections, the positive signals from international lenders on the release of further rescue loans to the debt-laden country and the reduction of its debt load to ensure its future within the eurozone, ASE's General Price Index has almost doubled.
The index plunged to 471 points earlier this year, reaching the level in the last 15 years amid political uncertainty which added to the country's financial woes. The index has climbed these days to almost 900 points.
"The main reason behind this reversal was the fact that since June Greece has moved far away from the risk of a potential exit from the euro. A return to drachma makes investors nervous. Psychology has improved," Pantelis Manos, financial news analyst at Greece's state radio broadcaster NET, told Xinhua.
Besides the post-election political stability in Athens, another key factor which has helped to change the ASE and its turnover was the recent shift in Germany's stance on the Greek crisis, Athens broker Vassilis Markakis added.
The trend is driven by investors confidence in the disbursement of the next bailout tranche to Athens in coming days, which was a clear message from European counterparts that Greece will remain in the eurozone, Manos Chatzidakis, chief analyst of Beta Securities, stressed in a recent article in "Imerisia" finance news daily.
The situation on the Athens Stock Exchange in coming weeks and months will be determined by the release of the new tranche which is regarded as a vote of confidence in the economy's future, and the fate of the government's structural reform program, which is key to the exit from the crisis, Attica Wealth Management's General Director Theodoros Kridas said.
The recapitalization process of Greece's banking sector, which is expected to be completed in April 2013, is considered as another significant factor for the future trend for Greek analysts.
Markakis predicted a short-term drop in ASE's General Price Index in the first quarter of 2013, pointing out that the uncertainty of the recapitalization plan will have effects on Greece's banking sector, which has been a major mover in ASE price index's rise.
Markakis asked foreign investors not to turn their backs on the Athens stock market and to seize investment opportunities next spring.
Latest official data show foreign investors' participation rate in the ASE in November increased to 51.4 percent up from 50.6 percent in October with some 26-million-euro investments in total. On average the daily trading volume stands at 50 million euros this year.
"Investing in the Greek economy will be a profitable move in the long-term future. As long as Greece can avoid political uncertainty and the scenarios of a chaotic default, possible return to the drachma and dissolution of the eurozone will be kept at bay," Manos stressed, expressing reserved optimism in the future.
The potential for significant gains is enormous, given the fact that ASE's capitalization is today 2-3 times lower than the results of other developed markets in Europe. Currently its market capitalization has shrunk to some 20 billion euros which accounts to about 10 percent of the Greek GDP. (1 euro= 1.30 U.S. dollars) Endi
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