Political risk dominates Liberal.gr

By | May 8, 2023

For another week, the movements in Athens Stock Exchange they were limited in scope, offered nothing great emotions. Even though there was generally positive sentiment, this could not be turned into a stronger rally with a concomitant increase in trading volume.

At Friday’s close, the general index stood at 1,111.24 points, 2.4% more than the previous week. Of course, one could say that this performance is very good since the corresponding index of the German stock market, the DAX 40experienced an almost imperceptible increase of around 0.4%, while the most important global stock index, the US. S&P 500 fell during the week by 0.80%. Good point, but in our own market there have been some good reasons to see a stronger one. movement up but in the end this was not possible.

During the past week, we had improvements in the estimates for the course of the general index of the Athens Stock Exchange by the analysts of the American investment bank. Goldman Sachswhich almost simultaneously improved its estimates on the evolution of the shares of the four systemic banks.

Analysts at the German Deutsche Bank did a similar thing for the big Greek banks, as well as for “ours”. Eurobank equities. On the analysis side, we also had the significant increase in the target price for Mytilineos (МИТИЛ) shares by Axia analysts and the initiation of coverage of Cenergy Holdings (CENER) by Pantelakis Securities analysts with a significantly higher price target than the current one. one.

In addition to the positive analysis released last week, we also had the announcement of first quarter financial performance for some large companies.

Of these ads, his stood out. Mytileneans which easily exceeded the estimates of all analysts and confirmed the very positive prospects for the rest of the year and that of Bank of Piraeus (Peir) which also published very positive results and was satisfied with its estimates for the sequel.

Despite this, however, the shares did not react as they have done on other occasions in similar situations. The only stock among the majors that showed clear bullish behavior, consistently hitting new highs over the past 52 weeks, was Hellenic Coca Cola Bottler (EEE).

Why was this particular action highlighted? It could be said that this is due to the good financial results of the first quarter that it announced last Wednesday. This would be a satisfactory explanation if we didn’t have the examples of other companies that announced positive news but didn’t see their actions do anything special.

However, another explanation is probably more satisfactory. The results of this particular company have little to do with Greece, so investors see no reason to associate it with the next Parliamentary elections.

Whatever the outcome of the election, it will not have a material effect on the company’s financial performance. This does not apply to the vast majority of stocks listed on the Athens Stock Exchange.

With just two weeks to go until the election, it is perfectly reasonable to see investors taking a cautious stance, preferring not to take big risks when making major stock purchases.

At the same time, we see that there is also no great desire to sell shares. This explains the small fluctuations in share prices in recent days, as well as the lower trading activity. He investors They know that there is political risk in our market right now but they can’t yet estimate how big it is. The indications we get from the daily surveys also play a role in this.

These show a slight gradual improvement in the performance of the ruling party, but without any possibility for the realization of the most desirable scenario for most investors, that is, the re-election of the outgoing government with autonomous majority. The realization of the second option preferred by investors, the formation of a coalition government, also seems very difficult. new republic and PASOK.

On the other hand, the relative improvement of Results of the test of the ruling party seems to take away, without meaning that they have zero chances, some possibilities that investors avoid.

So we see that investors, on the one hand, cannot reasonably expect that from their choices May 21th one of the desired (or tolerable) eventualities will occur, but on the other hand, they may feel that the chances of an undesirable eventuality are diminishing.

Obviously, since we are talking about polls we must be very cautious because many times they have not been able to successfully predict voter preferences. In this case, however, investors may not be so concerned about the possible failure of the pollsters’ research results, since few citizens believe that the elections of Can they will be able to choose government.

Citizens and markets take it for granted that a second election will be held at the beginning of July with a different electoral system, kinder to the party that will bring together the highest percentage of votes.

Therefore, trying to interpret the attitude of the investors, we could say that they know very well that the electoral contests can hide important risks for the actions in Athens Stock Exchange but they prefer to deal more seriously with them after learning the results of the May 21 elections.

“Betting” that the chances of an election result coming from avoiders are really small, they believe that it is more reasonable to make some important decisions after seeing before them the true reflection of voter preferences. voters. This is how the apparent hesitation of the stock market in taking a clear course from the start is explained. Easter and then.

We will find out if this assessment of ours is correct. next weeks. But, whether it is true or not, the truth is that in this period of time the elections and the risks that they can hide for the stock market, that is, what we call political risk, are constantly on the minds of the investors

It may not manifest itself in sharp and intense fluctuations, but it does not fail to largely dictate investing behavior and guide the movements, or rather the immobility, of traders on the market. Athens Stock Exchange.

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