The Aegean Can't Be Greece's Only Liquidity
Lack of new IPOs & low trading levels exposes a capital market problem
Last week was the launch of the Athens International Airport initial public offering (IPO). In September, Optima Bank also went public after a 17 year drought for Greek banks. The announcement comes at opportune time when the Greek stock market has been among the strongest in the world. Although great news and important for the country to continue this momentum, Greece still remains a stagnant market when it comes to attracting new IPOs.
Greece Has Not See Many New IPOs
While this is the most high profile listing in many years, new IPOs and raising capital in Greece continues to be problematic. With the exception of 2013-2015, mainly bank led rights offerings, Greece has not been a strong market in attracting new listings. 2023 saw roughly 2 billion euros worth of equity capital raised on the Athens Exchange.
In essence, this shows the country’s inability to provide a robust capital raising environment. To be fair, Europe as a whole has seen its global capital market share diminish as new companies look to the U.S. markets.
To make matters more difficult, the number of publicly listed companies trading on the Athens Exchange has shrunk over the last 10 years. There are currently only 146 names listed on the Athens main market.
Greece has a small investable universe of public stocks
Athex (il)Liquidity
The Athens Exchange saw 27 billion worth of value traded in 2023, one of the highest levels in the last 10 years, but still remains only a fraction of its past. In addition, trading has become concentrated, with the top 5 most traded stocks accounting for over 50% of the trading activity.
Market liquidity is one of the most important drivers in attracting large institutional investors to a country’s capital markets.
Additionally, the drop has also been a byproduct of poor long-term market performance, mistrust of the markets by the Greek population, and the lack of cheap market access, all which have discouraged investor involvement. We explore some of these issues in a previous post: Greece Has An Investing Problem.
Looking Ahead
It is not all bad news, there are significant catalysts which could boost investment interest and trading activity in the near future:
- Greece debt was raised to investment grade status & equities have the potential to be raised from emerging market to developed market status: This could lead to substantial new activity from both passive and active funds. Demand on the bond side was strong based on the latest issuance since Greece reached investment grade so the same could occur in the event of an equity upgrade.
- Equity market performance: Greece was one of the top 10 performing equity markets in 2023 and if this momentum continues, it will help attract both domestic and foreign buyers.
- Startups: The Greek startup scene has been red hot, providing an opportunity for the Athens Exchange to incubate these companies for future market listings.