As Coke Goes, So Goes 20% Of The Greek Stock Market (Which Is Now Smaller Than Vietnam's)
The erstwhile 'developed' market of the Athens Stock Exchange has just suffered a major blow. Coca-Cola Hellenic Bottling Co (CCHBC), the world's second largest Coca-Cola bottler, will quit the exchange for London next year, cutting the value of equities listed in Athens to a mere $31bn - smaller than Vietnam's $35.2bn. CCHBC is Greece's largest company by market value and sets a rather ugly precedent in leaving the troubled nation. Accounting for 23% of the benchmark index weight, it is 50% larger than all four of Greece's major banks combined. A new company, headquartered in Switzerland, will make a share-exchange offer for CCHBC and seek a primary listing on the London Stock Exchange - which will mean around 10% of all trading volume on the Athens Stock Exchange will be lost. The decision to leave Greece was prompted by concerns over political and economic stability - so for the Greeks, Coke Is not It.
From the 3/6/09 lows, CCHBC is up 99% while the ASE is down 42%...
Coca-Cola HBC Chief Executive Officer Dimitris Lois said in a Bloomberg Television interview broadcast yesterday that the ratings downgrades played a role in the decision to move, along with “stability both in the economic environment and regulatory environment” in Switzerland.
“The decision was triggered by the concerns from our investors with regards to the liquidity, so obviously we have addressed the liquidity by listing on the London Stock Exchange,” Lois said. “The second element was the downgrade from the two rating agencies. With these downgrades, the cost of potential borrowing was going up.”
The Greek government must work hard to prevent more companies fleeing overseas, according to Attica Wealth Management’s Krintas.
“The government needs to understand the problems these companies are facing,” he said. “You can’t discuss growth, you can’t try to get out of the recession without utilizing the arsenal you’ve got and the arsenal in this case is the big, productive enterprises in Greece.”