by Nicolas Bornozis, Capital Link,Inc, www.capitallinkgreece.com
Greek stocks increased this week by 0.65% closing at 3118.76 points. The FTSE/ASE 20 Index increased by 0.06% closing at 1747.98 while the FTSE/ASE 40 realized a gain of 3.60% ending the week at 2555.72 points. The FTSE/ASE small cap 80 Index increased this week by 1.71% closing on Friday at 462.79 points.
Greek inflation rose slightly to 3.3% year-on-year in June
National Statistics Service announced that Greece’s consumer inflation rose slightly to 3.3% year-on-year in June, (in line with NSS head estimates made a month ago), at a slower pace than market expectations. Note that the inflation slowed to 3.2% in May. Market participants had expected inflation at 3.5% in June on soaring energy costs. On a month-on-month basis, inflation declined 0.2% last month following a 0.3% rise in May, while the 12-month average inflation to June 2005 rose 3.2%. Greece’s EU harmonised inflation rose to 3.2% in June y-o-y from 3.2% a month ago. According to the head of NSS, Greek consumer inflation is expected to accelerate to 3.8 % in July due to this year’s late start in summer sales (one week less of sales this year). The index will return to a normal level in August, NSS head Manolis Kontopyrakis said last Friday. He added that average inflation is expected at 3.3%-3.4% this year. Inflation would be 1.1pps lower if it were not for high fuel prices. Greek inflation exceeds European levels. The EU-harmonized inflation rate averaged 3 % last year, the third highest among the 12 nations sharing the euro. The Greek government expects consumer prices to rise 3.2% this year. The European Central Bank projects inflation between 1.8% and 2.2% this year for the euro zone. Oil price increases have a larger effect on the Greek economy as compared with the nations because of the country’s higher dependency on oil. Oil consumption as % of GDP stands at 9.8 % compared with 6.6 % for the euro zone.
Public Investments Ports
The Minister of Shipping will sign a MoU with the EIB for up to EUR 3bn of loans regarding investments in the Greek ports. The duration of the loans will be 25 years with a 7 year grace period. We expect the two listed Greek ports, OLP (Piraeus Port) and OLTH (Thessaloniki Port), to benefit from the EIB loans. In the case of OLP, the capex requirements up until 2009 are expected at c. EUR 175m, while further expansion of the container piers are scheduled beyond 2009.
Country’s Fiscal data to the Commission in October
Greek Finance Minister, George Alogoskoufis, reiterated that the government will submit the country’s fiscal data to the Commission in October. Then, the Commission and EU finance ministers will make a public statement in November after having studied Greece’s draft 2006 state budget as well. In case of negative comments by Commission on Greece’s public finances, then additional measures should be considered. Meanwhile, the Greek minister also informed the bloc’s monetary affairs commissioner, Jaaqun Almunia, on Greece’s GDP growth rate in Q1 (+3.5%), while also referred to a good Q2 as well as to a positive trend in unemployment. Moreover, Greece’s Finance Minister said yesterday that if oil prices remain at this level, then this will have a negative global economic impact. He spoke as he arrived from a meeting of European Union finance ministers in Brussels. The minister said that growth estimates have a high degree of uncertainty as it is not known whether oil prices will remain at these high levels. ‘’One thing is for certain that there will be an impact on growth but to quantify the impact we need to do more work”, the minister said.
ATHEX will establish two separate markets
The ATHEX will establish two separate markets for “healthy” stocks and a third market for stocks under supervision and/or for stocks with a market price of EUR0.30 and lower The 1H 2005 corporate results to be published a month later – end September. Mr Kapralos, CEO of the ATHEX announced that a new “International” market will be established with the stocks of the FTSE/ASE 20, FTSE/ASE 40 as well as other stocks that will fulfil certain criteria, such as trading volume, free float etc). The session hours of this market will be from 11am to 5pm (local time), which is an hour more than the current status. The rest of the stocks will be included in the main market, while all the stocks that are under supervision, or their market price is at EUR0.30 and lower will be included in a third market. In other news, the Capital Markets Commission announced that the listed companies will have the opportunity to publish their 1H 2005 results until the end of September, instead of the end of August, which is the usual deadline due to difficulties with the adoption to the IFRS rules.
Greek public finances
According to “Imerissia” newspaper, RAE has submitted two drafts to the Ministry of Development for the liberalization of the electricity and natural gas markets, with the bills expected to be submitted to parliament for approval within this summer. According to the draft for the liberalization of the electricity market, all customers, except residential, are allowed to select their suppliers, while residential customers are allowed to choose their supplier from 2007 onwards, complying with the EU directive. The new status will apply for all residents in the country except those in islands. Also, the new bill is expected to enhance the regulatory roles of HTSO and RAE. With respect to the liberalization of the natural gas market, customers are also allowed to have a choice on their suppliers, while DEPA, the natural gas public company, is separated into two companies: a parent company that will undertake the marketing activities and a 100% subsidiary that will own and operate the transmission network.