Yet another session that felt like treading water, during the first part of trading on the first day of the new stock market week, with the General Index moving within a narrow range and remaining in positive territory, while trading volumes remained low (the lowest turnover in the last 19 sessions).
The picture changed after 2:00 p.m., as buyers made their presence more felt in the index-weighted banking sector, causing the Index to move more aggressively and secure a close above 2,500 points.
Beyond that, and for those who enjoy statistics, today’s closing of the General Index marks a new 199-month high, with the next-highest close having been recorded on November 18, 2009 (2,528.95 points).
The DTR is at a 127-month high, with the next-highest closing level recorded on November 16, 2015 (3,073.8 points).
Despite the ongoing “rotation” among large-cap stocks—which keeps active traders on their toes—and even if we exclude a few smaller-cap stocks where major shareholders have demonstrated, in practice, their interest in their shares, the rest—and by far the overwhelming majority—of the market remains, to put it mildly, hopeless, with dozens of stocks literally left “to fend for themselves,” including even stocks of companies whose satisfactory results would clearly justify much better stock market performance.
In vain do the “admirers” of lower-market-cap stocks await a gradual broadening of investor interest to a larger number of stocks. While this may be the prevailing view among many domestic analysts, the market data, at least for now, tells a different story.
Taking developments in chronological order, the attention of active investors certainly remains focused on the ongoing negotiations between the U.S. and Iran. According to a joint statement by Qatar and Pakistan, “the two sides agreed on a roadmap aimed at reaching a final agreement within 60 days,” and this resulted in a further decline in oil prices.
U.S. Vice President Jay D. Vance stated that “the talks continued into the early hours of the morning and yielded substantial results, despite the moments of tension that preceded them.” At the same time, Vance left open the possibility of a partial release of “frozen” Iranian funds as part of a final agreement.
Returning to the Athens Stock Exchange (ASE) and today’s trading session, it is abundantly clear that traders’ interest continues to be focused on a handful of large-cap stocks, with the ASE experiencing conditions unlike any it has seen in many decades.
Thus, the ongoing “flurry” of rights offerings is not triggering a barrage of “limit down” when announced, as was the case in the recent and more distant past, but is viewed as a significant foundation for the market’s future, as it strengthens the productive base of listed companies and creates the conditions for higher recurring profitability.
“An increase in market capitalization cannot be sustainable without a corresponding improvement in fundamentals and growth prospects. Expanding production capacity, entering new profitable lines of business, and strengthening competitiveness inevitably lead to a revision of estimates for future earnings and, consequently, to higher valuations. At the same time, listed companies appear determined to play a leading role in the next, more “mature” phase of the Greek Stock Exchange by achieving the scale, diversification, and quality characteristics required to maintain the undiminished interest of international investment funds. Beyond short-term stock market gains, the current period may prove pivotal for a number of banking and industrial groups, which recognized the scope of the opportunity early on and are capitalizing on the favorable liquidity conditions to accelerate their investment plans. “These moves are reshaping the landscape not only for their shareholders but also for the Greek economy as a whole, by boosting productivity, investment, and the country’s long-term growth potential,” according to Beta Sec.
All of the above simply serve to confirm the assessment of a long-standing market participant, according to whom, “the ‘story’ of the upgrade will continue to play out through the familiar few highly traded stocks, as this is the norm in ‘shallow’ markets, but the comparison with similar foreign companies will be more demanding. Unfortunately, in a developed market, the shares of companies with lower market capitalizations risk being devalued if there are no “domestic forces” to take an interest in them, or if there is no deal that will inject “vitality” and interest into a larger portion of the market.”
It is a clear indication of the ongoing decline in trading activity that at 2:30 p.m., after four hours of trading, more than 50 stocks still had trading volumes not exceeding 1,000 shares, while a significant number of stocks had literally zero trading activity. All of the above occurred on Euronext Athens, which hopes to be formally upgraded to a “Developed Market” (!)
Beyond that, trading activity continued in the BIO Group, despite the dividend payouts at ELHA and CENER, which will be discussed in more detail later in this commentary.
Meanwhile, according to the Hellenic Capital Market Commission’s report regarding net short positions exceeding 0.5%:
Arrowstreet Capital Limited Partnership continues to hold a net short position of 0.50525% in QLCO shares; JP Morgan Asset Management (UK) Ltd holds a net short position of 0.80012% in MTLN shares, and AKO Capital LLP holds a net short position of 1.31857% in MTLN shares.
Marshall Wace LLP, as of June 19, reduced its net short position in MTLN shares from 0.72087% to 0.69301%, while Qube Research & Technologies Limited, on the same date, increased its net short position in BYLOT shares from 0.59863% to 0.61894% and also reported a net short position of 0.53538% in ADMIE shares.
Major European markets showed mixed trends and minor fluctuations, with investors’ attention remaining focused on the negotiations between the U.S. and Iran.
Sentiment in the bond market is mixed. The yield on the U.S. 2-year Treasury note rose to 4.22%, while the yield on the 10-year note rose to 4.48% (the yield on the 30-year note stood at 4.92%). The yield on the Greek 10-year bond fell to 3.623%.
The General Index remained in positive territory throughout the day, reaching an intraday high of 2,506.5 points (+1.23%). At 5:00 p.m., it stood at 2,504.07 (+1.13%) and closed at 2,501.13 points, with daily gains of 1.02%.
Trading volume stood at 215.4 million, of which 22.4 million related to pre-arranged trades (OPTIMA, AKTR, REALCONS, ALWN, BOCHGR, PIR, ADMIE, ETE, ALPHA, EKTER, BELA, GEKTERNA, DEI, INTEC, EUROB, OTE), with ETE, EUROB, ALPHA, and PIR accounting for 39% of the total gross trading value.
Of the total turnover of 215.4 million, 187.5 million relate to trades in FTSE25 stocks.