by NICOLAS BORNOZIS
The Greek stocks market demonstrated a significant increase this week, with the ASE gaining 9.90% closing at 1876.64. This new-year high level is attributed to the sustainable positive international environment and the technically driven buying interest for the banking sector and OTE’s stock by institutional investors (domestic and foreign). Daily average turnover value was formed at € 234.27, reflecting the improvement in investors’ sentiment as well as the high level of liquidity. The FTSE/ASE 20 Index closed higher 11.71% than last week, at 942.02. The FTSE/ASE 40 Index also rose 9.22% closing at 196.41. The FTSE/ASE 80 Index gained 11.97%, closing at 525.51.
In economic news this week, the Ministry of Economy reported that during the Jan-April period the budget deficit reached Euro 6.21bn (5% of GDP) rising 55.6% y-o-y, above the government’s initial target (+43.6% y-o-y). The National Statistics Service (NSS) also reported a rise in the wholesale price index by 1% y-o-y.
The Eurozone’s inflation rate in May reached 1.9% vs 2.1% in April, raising the odds for the European Central Bank (ECB) to proceed with an interest rate cut on June 5. The May unemployment rate in the Eurozone stabilized at 8.8%. The ECB decided to lower the basic interest rate by 50bps to 2%, the lowest level since 1948. The decrease was in line with expectations. The Eurostat also reported that 1Q03 GDP rate in the Eurozone reached 0.1% vs 1% in 2002. The EU estimates that 2Q03 and 3Q03 GDP rates are forecast to settle at 0%-0.4%.
In the shipping industry, the EU parliament approved the ban of monohull ships forcing either their replacement or their inclusion under a non-EU flag. Although the majority of the fleet is already under a non-EU flag, such a move will hurt the EU shipping industry. Greece is among the largest players in the commercial shipping market and the fleet under Greek ownership is dominant globally.
On a microeconomic level, the State plans to start the privatization process of Hellenic Tourist Real Estate Company (ETA) through its listing on the ATHEX in July. The State plans to sell a 25% equity stake in the company. The total amount the State plans to raise from privatizations in 2003 stands at approximately €3bn. OPAP, PPC and Hellenic Exchanges are among the state-owned companies in which the state plans to reduce its participation. OPAP’s third public offering is scheduled for mid July. The government will sell a 24.61% equity stake (78m shares) while the proceeds are expected to reach Euro 700-750m. PPC’ third public offering is expected to take place until the end of 2003. The government plans to sell a 10-19% equity stake.
Alpha Bank, Greece’s second largest bank and Alpha Investments, its 38 per cent owned portfolio investment subsidiary, announced this week their intention to merge. The exchange ratio for the all-share merger will be 1 Alpha Bank share for 5.3 Alpha Investment shares, representing a premium of 6.3 per cent over the Alpha Investments closing share price of June 4, 2003 and corresponding to three fourths of the discount.
The completion of the merger is expected before year-end and is subject to regulatory and legal approval. Upon completion of the merger and the elimination of all cross holdings between the two companies, 9,637,104 new Alpha Bank shares will be issued increasing the total number of Alpha Bank shares outstanding to 194,808,664. Also this week, a Draft Merger Agreement was signed between the credit institution Alpha Bank A.E. and Alpha Romanian Holdings Company A.E. for the merger by absorption of the latter by the former.
NATIONAL BANK OF GREECE
The chairman of the National Bank of Greece (NBG) announced this week that, 2002 profits from foreign activities accounted for 25% of the group’s profitability vs 12% in 2001. Foreign activities’ profits are expected to double within the next five years. The chairman also refuted the rumors relevant to the sale of a 10% equity stake in NBG, that the Greek state currently holds.
The Board of Directors of OTE approved the issue of a syndicated loan of Euro 1.75bn. The proceeds are expected to replace the existing syndicated loan that includes non-favorable clauses (Euro 1bn) and the debt obligations of Cosmote (Euro 420m). As far as the Cosmorom issue is concerned, Rom Telecom’s BoD will decide during its next meeting by next week.
The government signed an agreement with Paneuropean oil and Industrial Holdings S.A. (member of the Latsis group) relevant to the sale of a 16.65% (43,500,000 shares) equity stake in Hellenic Petroleum (H.P.) at the price of Euro 7.5 per share (total of Euro 326m). Furthermore, H.P. will absorb Petrola with the share exchange ratio standing at 1:5.36 in favor of the former. The Latsis group will increase its stake to 25% by the end of 2003. The annual savings of the merger are expected to reach Euro 25m. The group’s primary goal remains the acquisition of the Serbian refinery Beopetrol.
BANK OF CYPRUS
The Board of Directors of Bank of Cyprus Ltd decided the change of the management structure of the Cyprus Investment and Securities Corporation Ltd (CISCO). Under the new structure as of 6 June 2003, Mr Charilaos Stavrakis, Group General Manager International Banking Services, is also assigned the position of CISCO’s General Manager. In other news, as of 7 July 2003, the securities issued by the Bank of Cyprus will be transferred and form part of the Central Register and Central Depository of the Cyprus Stock Exchange (CSE).