The Greek stock market has maintained its 55 per cent gain since the end of the Iraq war as retail investors return to pick up shares in a fresh round of privatisation offerings.
The socialist government’s drive to raise € 3bn this year in privatisation revenue, mainly through public offerings, has revived trading activity after a long break. And the general election, due in April at the latest, is adding further spice to the Athens bourse.
Brokers say the third factor underpinning this summer’s recovery is optimism about the 2004 Athens Olympics.
Greece has faced criticism over delays in constructing venues for the Games.
Costs are running ahead of buget, while correcting organisational flaws in Olympic test events due this month will also be expensive.
But the International Olympic Committee is full of praise for Athoc, the Games’ organising body, and brokers say the Games could help sustain the current rally. “There’s evidense that big international sports events like the World Cup and the Olympic help push up the local market, even if the impact isn’t enormous,” says Paris Mantzavras of HSBC-Pantelakis Securities.
Economists forecast the Games will add about 1 percentage point to Greece’s gross domestic product next year. While most events are in Athens during August, Greece also expects more than 1m addition tourists in 2004.
Greek construction companies stand to gain most from the Olympics, with more than € 2.5bn of public works contracts in the pipeline. In addition to building sports venues, the city’s roads and mass transport systems are being upgraded for the Games.
Yet the construction index has underperformed the market, indicating investors are sceptical about the sector.
“There’s a feeling the best is over for construction companies, except for one or two big groups. Order books may look empty the day after the games,” sayd Vassilis Kletsas of Global Finance in Athens.
Retailers, food processors, hotels, mobile and, to some extent, banks are seen as potential winners next year.
Athens-based Olymbic sponsors listed on the bourse “should all benefit from the extra exposure”, Mr Kletsas says.
The finance ministry is already cashing in one the Olympic feel-good factor. A secondary offering of 25 per cent of Opap, the state-controlled sports lottery and gaming organisation, was subscribed six times and raised €723 bn.
The €55m initial public offering of Piraeus Port authority was also oversubscribed heavily by local investors.
“The renewed flow of privatisation offerings has underlined the government’s commitment to structural reform and that makes investors feel more confident,” says Christos Elafros of EFG Eurobank Securities.
Speculation the finance ministry may be considering the sale of the 10 per cent stake it holds in National Bank of Greece, the country’s biggest bank, is boosting the banking index.
The government is already committed to an IPO this year of Hellenic Tourism Assets, the holding company for state-owned hotels, marinas and real estate for tourism development. With assets valued at more than €6bn being made available on long leases, the company is seen as the engine for upgrading Greece’s tourist industry after the Games.
“The legacy of the Olympic should be growth based on the capital’s improved infrastructure and its prospects for attracting higher-quality tourism in the medium-term,” Mr Mantzavras says.
(From Kerin Hope, Financial Times)