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Evolution and opportunities in the Greek capital market

May 2001

Dr Panayotis Alexakis

President of the Athens Stock Exchange (ASE) and the

Athens Derivatives Exchange (ADEX)

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ASE Basic Objectives

A deep and liquid market

Maintain the standards of the EU capital markets to achieve equal participation in the formation of the single European capital market

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ASE Vision

Strong

Safe

Reliable

An exchange that is:

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Structure

Greek equities market: Main market Parallel market New market Secondary listings of equities GDRs, and units of mutual funds for

emerging markets

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Derivatives market

Indices Bonds Stocks (in 2001b)

(Futures and options)

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Indices

General index Parallel market index Sectoral indices FTSE/ASE 20 FTSE/ASE Mid 40 FTSE/ASE Small 80 (in June 2001)

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The Greek Economy and ASE

Stable economic and political climate

Greece’s entry into the Eurozone, since January 1st 2001

Balanced budget, low inflation rate

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Sustained growth prospects:

Real GDP growth 4.1% in 2000 and projected 5% for 2001, exceeds that of Eurozone’ average, 3.4% and 3.0%, respectively.

EUR 25 bn in EU structural funds for investment in Greece.

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2004 Olympics to boost investment

Restructuring and privatisation are in progress

Telecoms, energy and transport liberalisation

Market cap has increased since 1998 (from Euro 67,100 million to Euro 118,200 million in end 2000)

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Capital raised through ASE

Euro 8.5 bn in 2000, 6.5% of GDP ASE provided more financing than banks in

same period Greece has high market cap/low credit level for

non-banking sector Capital raised (Euro bn) 97 98 99 00 0.2 3.3 12.9 8.5

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Sectorial breakdown

Financials36%

TMT19%

Industrials16%

Construction4%

Miscellaneus16%

Parallel9%

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Blue chips have performed better since 1998

Banks and telecoms represent one third of volume traded.

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ASE restructuring directions

Legal and regulatory framework restructuring

• Modernisation of listing requirements, minimum equity, minimum free float, company records.

• Upgrading of listed companies, financial disclosure, corporate governance, use of funds raised

Information technology infrastructure modernisation• ASE wide area network upgrade• efficient trading and clearing systems• operation of a dematerialised shares system

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New products

• New indices (local and regional) in co-operation with FTSE

• The operation of the Athens Derivatives Exchange with futures and option products

• The creation of a new market for dynamic, fast growing companies

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• Emerging market instruments for the region of S.E. Europe – S.E. Mediterranean, such as GDRs, mutual funds and portfolio investment companies for emerging markets.

• Strengthening of ASE’s position in the region, through the listing of firms in Athens, and cooperation agreements with exchanges.

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ASE New Organizational Structure

Strengthening of listed companies division

Strengthening of market surveillance through on line-real time systems

Creation of business development division, with marketing, sales and R&D departments

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Rationalisation of the companies under the Hellenic Exchanges S.A. holding company.

• Merging of ADEX with ASE

• Enhancement of the role of the derivatives clearing house to act also for the stock market

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• Enhancement of the role of the holding company Hellenic Exchanges SA, which is listed in ASE

• Improvement of institutional and operational framework, replacement of laws and ministerial decisions by an operational rulebook for ASE,members, listed companies and investors

• Timely preparation and the market functions in Euros, since the beginning of January 2001

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ATG

9 April 00Greek elections

19 June 00Greece’sentry in Eurozoneofficiallyapproved

August 98Rusian economiccrisis

14 March 98Devaluation of drachma

1 January 01Greece’s entry in EMU

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1998 1999 2000 End-March

General index (1980=100) 2,737 5,535 3,338 3,044

FTSE/ASE 20 1,724 2,910 1,903 1,745

FTSE/ASE 40 n.a. 1,000 402 371

Market Cap of ASE (Euro bn) 67.1 197.4 118.2 110.6

Market Cap of ASE (USD bn) 61.7 181.6 108.7 98.4

Market Cap/GDP (%) 64.2% 177.2% 99.7% 82.7%

Avg. daily volume (Euro m) 157.4 725.5 390.7 133.1

Avg. daily volume (USD m) 144.7 667.5 359.4 118.9

Equity market indicators

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Breakdown of volume traded

End-March

Banks 20.9%Small Caps. 12.9%Holdings 8.1%Construction 7.6%Telecoms 6.8%Wholesale 5.7%Textiles 4.8%Food 3.2%Investment Cos. 2.4%Metallurgicals 2.1%Informatics 2.1%Insurance 1.2%Other 22.2%

0.7

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Funds

• Great interest in IPOs and Rights Issues imply cash-rich companies

• At the end of 1998, equity mutual funds held only a 6% stake of the mutual funds market.

• In early 2000 equity mutual funds had increased their stake to 40.9%.

• At the end of 2000, equity mutual funds held about 22% stake of total mutual fund market.

We expect that in the long term the trend towards equity funds will resume, with their market share

approaching that of the European average (48%).

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Flow of funds1999 2000

Companies listed 282 332

IPOs (Euro m) 2,349 1,811

Rights Issues (Euro m) 8,070 6,608

Total funds under management (Euro m) 35,039 30,249 Equity mutual funds 14,330 6,659 Non-equity mutual funds 20,709 23,590

Equity/ Total funds (%) 40.9% 22.0%

Balanced/ Total funds (%) 8.7% 10.4%

Bond/ Total funds (%) 11.3% 15.4%

Money Market/ Total funds (%) 39.1% 52.2%

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Market Indices

• On July 31st Morgan Stanley Capital International decided to include Greece to its developed markets indices, effective from May 31st, 2001.

• The capitalization of MSCI Greece increased by 27.6% (from US$ 47 bn to US$ 60 bn).

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Key sectors in Greek Capital Market

Financials, Telecoms and the Energy Sector have a heavy weight in the Greek market cap.The sale of a minority stake of Public Power Corporation and of Hellenic Petroleum to strategic partners as well as the privatization of Hellenic Telecom Organization and of Olympic Airways is on schedule.

Market cap MSCI Greece MSCI WorldFinancials 38.0% 43.2% 19.0%Consumer goods 10.0% 10.1% 7.0%Telecoms 13.5% 15.2% 8.5%IT – Technology - Internet 8.6% 7.7% 17.6%Media 3.6% 1.6% 4.0%Industry – Energy 17.4% 15.6% 22.0%Tourism –Transportation 3.1% 3.0% 2.5%Other 5.8% 3.6% 19.4%

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Indices valuation

MSCI Greece which accounts for 51% of total market cap tradesat a P/E of 16.8x and an EV/EBIT of 22.7x

General index which accounts for 58% of total market cap trades at a P/E of 15.3x and an EV/EBIT of 24.4x

The research of most Greek and foreign Stock Brokerage Houses indicates a market P/E of 14.9x and an EV/EBIT of 22.7x.

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Comparison

1999 2000 2001eW. Avg. actual P/E, Greece 18.0 16.5 14.9W. Avg. actual P/E, Europe 29.8 24.4 21.6

Source: P&K Research, SSB, MSCI

At 14.9x 01e P/E compared with a European 21.6x, the Greek market looks cheap

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Sector valuation

2001eP/E

Banking 13.9Insurance 29.3Health care 34.2Retail/Durables 21.5Retail/Non durables 18.9Materials 22.2Cements 12.7Packaging 21.0Energy 11.9IT 25.5Telecoms 16.0Construction 17.0

Source: P&K Research

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ASE Offers

Foreign investors can be assured that ASE is

committed to offer a

• Safe,

• Credible, and

• Transparent market

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http://www.ase.gr

For more information

Thank you for your kind attention