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November, 2000. Materials for Presentation. The International Investors’ View Of Risks and Opportunities in Greek Financial Assets. Overview. Greek Economy – An Overview Macroeconomic Development and Indicators Credit Ratings and Rating history of the Hellenic Republic
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November, 2000 Materials for Presentation The International Investors’ View Of Risks and Opportunities in Greek Financial Assets
Overview • Greek Economy – An Overview • Macroeconomic Development and Indicators • Credit Ratings and Rating history of the Hellenic Republic • Credit Developments and Implications • Bond Markets • Equity Markets • Macro-economic risks • Addressing the Changing Market Environments
Greek Economy – Overview of a positive development • 1999E GPD US$ 128.9b. (2000E US$ 123.5bn.) • Real GDP Growth rate above EU average since 1996 – 3.5% in 1999 • Large public sector in the economy • Steady economic improvements in recent years • Improving public deficit and tightened monetary policy • On-going low inflation - average of 2.6% in 1999 • Privatisation for leading Government enterprises in progress • Convergence and integration in EMU well on track • Falling interest rates and improved credit profile Source: CIA World Fact book 2000
Greek Economy – Inflation Declined whilst Growth Increased Source: National Bank of Greece; CSFB Research
Greek Economy – Unemployment and Interest Rates Are Heading Down Source: National Bank of Greece; CSFB Research
Greek Economy – Deficit Control at Work Source: National Bank of Greece; CSFB Research
Moody’s Foreign Currency: A2 Local Currency: A2 Outlook: “STABLE” Standard & Poor’s Foreign Currency: A- Local Currency: A- Outlook: “POSITIVE” The Sovereign Credit Rating of Greece: Now Firmly Single-A Fitch Foreign Currency: A- Local Currency: A- Outlook: “STABLE”
Aaa / AAA Aa1 / AA+ Aa2 / AA Aa3 / AA- A1 / A+ A2 / A A3 / A- Baa1 / BBB+ Baa2 / BBB Baa3 / BBB- Ba1 / BB+ Ba2 / BB Sovereign Rating History – LT Foreign Currency Debt
Hellenic Republic – Credit Development • Country Risk has declined • Greek Government has gained credibility • Foreign currency credit “ceiling” has been upgraded to Aaa by Moody’s • Convergence to EMU criteria is well on track • Entry in Euro-zone likely to result in: • Monetary Stability • Low interest rates • Reduced exchange rate risk • Financial markets denominated in Euro’s • Better level-playing field with other European countries • For the international investor these macro-economic developments may relatively increase the attraction of Greek investments
Bond Issuance by sector US$ mil. Bond Issuance by rating Greek Issuers are well Established in the Eurobond Markets Source: Bondware
GRD bn. Equity Markets – Market Capitalisation • Correction and slow-down in 2000 • Volatility in the Greek equity market • World-wide volatility in equity markets • Volatility due to limited size and liquidity • Volatility due to significant concentration • Consolidation in Banking sector • Large caps and telecom performance has retained strong performance Data Source: National Bank of Greece
European Equity Indices 1998-2000 Equity Markets Source: Bloomberg. 02/01/1998=100
*15 Largest Companies by Market Capitalisation The Greek Stock Market – Concentration and Diversity • Main Sectors in the Economy: • Banks 27.7% • Telecom 12.6% • Metal industry 7.3%
Modernizing the Economy and Reducing Public Debt through Privatizations • “Privatisation Programme well ontrack”: • Increased market volume • Increased market liquidity
Macroeconomic Risks – Investors’ viewpoint • Tight Financial and Monetary Policy likely to continue • High level of public debt will remain a constraint for years to come • EMU convergence well on track – but still incomplete • Unemployment still a major challenge • Further Slowdown of EU growth • GDP growth slows down by 0.7% for each 1% reduction in EU growth • Current Account deficit to GDP increases and neutralises the devaluation effect • Increase in import prices • Sustained high oil price may adversely affect economy • EUR/USD exchange rate affects GRD price of oil and commodities • Inflation increases by 0.20pp for every 1% increase in import prices Data Source: National Bank of Greece
Addressing the Changing Market Environments • Move from EMI to MSCI in 2001 will impact the Greek business environment • Analytical focus will move from country base to sector base • Relevant peers will now be top performing worldwide corporates • Recommended approach for Greek companies: • New beginning in communicating with investor community • Increased transparency • Improved financial reporting • Adoption of IAS in addition to Greek GAAP • Improved Investor Relations capabilities • Communication • Corporate information readily available • > Value creation through analyst and investor “friendly” corporate structures and communication policies