FTSE says Greece’s stock market on negative watch

Greece's stock market will stay on watch for a possible downgrade to "advanced emerging" from its current "developed market" status, global index compiler FTSE said following an annual review of country classifications.
"Changes recently introduced by Greece to take into account the outstanding FTSE Quality of Markets criteria have yet to be fully adopted by the market," FTSE said in a statement headlined "Greece – Demotion to Advanced Emerging status."
"Greece will therefore remain a Developed market but will remain on the watchlist and be reviewed again in September 2009," FTSE said.
In April this year FTSE's CEO warned that Greece was at risk of losing its developed market status. FTSE placed Greece on a watch list for possible demotion in 2006, a move that if implemented may prompt an exodus of index funds that track mature markets.
The index compiler said problem areas included low liquidity in the Athens bourse's equity derivatives market and stock-lending procedures.
On Thursday Hellenic Exchanges Chief Executive Spyros Kapralos said he was pleased the Greek market retained its 'developed' status and said the bourse needed to communicate the recent changes it has implemented to the wider market.
"Today's announcement by FTSE that our market remains in the developed category is a positive note at a difficult time for stock markets globally," Kapralos said.
"The decision (by FTSE) comes after hard work that has been done by the stock exchange and the securities regulator last year in order to meet FTSE criteria. These actions include the adoption of Mifid and other initiatives we have taken," he said.
Based on August statistics, foreign portfolios own 51.4 percent of the Greek equity market's available free float. Greek equities have a market capitalisation of about 124 billion euros.
FTSE's indices are used by investors worldwide for analysis, performance measurement and asset allocation. Countries stay on watch for at least 12 months before any change to their status.