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Posted on: 17/Nov/2009

HELEX boosts its regional profile through hooking up with rivals

Hellenic Exchanges CEO Spyros Capralos (file photo) said the group is keeping an eye on merger activity taking place in the sector.
By Stelios Bouras - Kathimerini English Edition

Hellenic Exchanges (HELEX), the operator of the Athens bourse, intends to build on growing links with rival stock markets in order to gain a strategic edge in the region, according to its CEO Spyros Capralos who left open the possibility of expansion through takeover activity.

Capralos told Kathimerini English Edition in an interview yesterday the bourse will push ahead with plans to make cross-border transactions faster and cheaper for investors using Athens as a gateway to international markets, helping to attract liquidity and boost its competitiveness.

“In the past we were all talking about buyouts of stock markets, now this has changed a little. This is partly due to what technology offers and efforts to join markets,” he said.

Last month, HELEX announced the launch of a network, called XNet, which allows banks and members to place orders online to markets including Serbia, Albania, Bosnia, Egypt and Jordan via Athens. Prior to this, the Greek bourse launched a joint index with its peer in Istanbul, made up of 15 companies from each country, after having placed in operation a common trading platform with the Cypriot Exchange in 2006.

So far, National Bank has announced the start of an ETF, or exchange-traded fund, on the Greek-Turkish index. An ETF is a basket of shares tracking an index, offering risk diversification at low cost.

“The hooking up of markets can be achieved via strategic partnerships,” said Capralos, who is also chairman of the Federation of European Stock Exchanges (FESE), a group representing 42 exchanges in equities, bonds, derivatives and commodities.

HELEX has tried the other option of expanding via acquisitions in recent years but steps aimed at buying into the Ljubljana and Sofia bourses did not bear fruit. The group continues to eye possible takeover targets, said Capralos without giving any clues on where this might be.

“All markets in our area interest us,” he said.

As bourses vie for regional dominance, the latest bout of merger activity is taking place in Poland where the government is selling a controlling stake in the Warsaw bourse. Germany’s Deutsche Bourse is the sole bidder in the sale.

Athens shines despite gloom

Greek stocks have been one of the best performers in Europe so far this year despite forecasts predicting the domestic economy will continue to contract next year as the eurozone pulls out of recession.

The Athens bourse’s benchmark general index has added 45 percent since the start of 2009 versus a 17 percent rise in Germany’s DAX and a 19 percent gain in London’s FTSE.

Capralos pointed out that higher levels of volatility on the Athens bourse have contributed to the performance along with fresh funds flowing into the market.

“What has happened since March is that a lot of money has come in from abroad and this helped lift stock prices,” he said.

Central banks have been pumping liquidity into money markets around the globe as a means of boosting lending and helping the global economy get through the worst crisis since the Great Depression. This has also prompted foreign investors to up their positions after aggressively selling Greek stocks in the financial storm that shook markets worldwide late last year.

Foreign portfolios accounted for 49.7 percent of the market’s total capitalization at the end of October, rising from 48 percent in January.

As for the government’s recently announced tax on Greece’s top 300 companies as a means of financing an aid fund for low-income earners, the CEO played down the impact on equities, due to its one-off nature.

Hellenic Exchanges, with a market value of some 640 million euros, has seen its shares rise 75 percent since the start of the year to 9.80 euros. For the first nine months of the year, net profit fell 44 percent to 27.9 million euros as falling stock prices hit revenues.

“Volume of business has increased significantly in the second and third quarters. However, since we get paid on the value of transactions, the reduction in prices hit revenues,” he added.

Kapralos said efforts will focus on keeping a lid on costs and boosting productivity in the tougher market conditions.

“We are very careful about the cost side. In 2009, we will see an across-the-board drop in costs for a fifth consecutive year. In 2004, HELEX employed 461 people and now we have 275,” he said.

HELEX is 50.6 percent-controlled by international investors and Greek banks hold another 18 percent.

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source: http://www.ekathimerini.gr

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