Despite the fact that the ASE Composite index hit a two year low during the first week in July, we fail to identify any good reason for any major reversal in sentiment in the short term. The valuation of several issues has become very attractive, however a number of reasons keep investor confidence badly hurt. Concerns over banks first half 2001 results, tension and uncertainty on the political front and a rather nervous international environment compose a rather unfavourable picture for equities for the time being.
Fundamentals and valuations are currently ignored, as investors remain sentiment driven and prefer to stay on the sidelines in anticipation of some clear signs that international sentiment for equities is improving. The result is that even stocks that are now considered a bargain from a valuation point of view are penalized due to poor market conditions.
We definitely believe that sooner or later this is going to change and fundamentals will regain their importance in investment decision making. However, it is highly uncertain at present to define the timing of this change. Despite short term technical reactions which are on the cards, we would expect the same picture to prevail in the Greek equity market in the coming week.
Telecoms provided plenty of newsflow as CosmOTE, Panafon and Stet Hellas have been awarded the basic 3G licenses with the first two also being allocated additional spectrum licenses. In addition, CosmOTE, after unveiling a better than expected 66% subscribers growth for 2Q01, announced a 14% tariff reduction for its contract customers in a bid to further reinforce its market position and induce usage among its existing clients. Its shares showed resilience to the market, adding 2.5%. OTE shed 0.7% while Panafon had a bad week with losses of 11.3%.
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