Evolution and opportunities in the Greek capital market

1. Evolution and opportunities in the Greek capital market Dr Panayotis Alexakis President of the Athens Stock Exchange (ASE) and the Athens Derivatives Exchange (ADEX) May 2001

2. 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

3. ASE Vision An exchange that is: • Strong • Safe • Reliable

4. Structure Greek equities market: • Main market • Parallel market • New market • Secondary listings of equities • GDRs, and units of mutual funds for emerging markets

5. Derivatives market • Indices • Bonds • Stocks (in 2001b) (Futures and options)

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

7. 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

8. 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.

9. 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)

10. 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

11. Sectorial breakdown

12. Blue chips have performed better since 1998 • Banks and telecoms represent one third of volume traded.

13. 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

14. 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

15. 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.

16. 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

17. 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

18. 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

19. 19 June 00 Greece’s entry in Eurozone officially approved 9 April 00 Greek elections ATG 1 January 01 Greece’s entry in EMU August 98 Rusian economic crisis 14 March 98 Devaluation of drachma

20. Equity market indicators

21. Breakdown of volume traded

22. 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%).

23. Flow of funds

24. 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).

25. 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.

26. 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.

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

28. Sector valuation

29. ASE Offers • Foreign investors can be assured that ASE is • committed to offer a • Safe, • Credible, and • Transparent market

30. For more information http://www.ase.gr Thank you for your kind attention