ATHENS EXCHANGE | Low velocity contains upside
In this note, we try to analyze the key factors behind the low trading volumes that have contained AthEx’s operating performance, especially during the last couple of years. Our analysis suggests that the key reason behind this trend is the low trading velocity, especially on non-financial stocks, which is attributed to a number of cyclical and structural factors. We thus think that although trading velocity will tend to improve from the current extremely low levels due to the gradual reversal of cyclical factors, there will be some structural headwinds that will contain its upside. In addition, we believe that asset prices will move faster than trading velocity thus contributing more to the anticipated increase of ADV.Based on the above, we have reduced our estimates for future trading velocity which lead us to adopt somewhat lower revenues and profitability estimates, by 11% and 21% respectively. We retain a neutral stance for the Athens Exchange as we think that its current valuation incorporates the group’s anticipated potential for recovery to a great extent, if not fully.
The Hellenic Exchanges is engaged in the following business sectors: trading, clearing, settlement, data feed, IT, exchange services, depository services, clearinghouse services, and other.
Eurobank Equities is a Greek-based firm offering research, sales and trading services to institutional, corporate and private clients. The company is wholly owned by Eurobank, one of the 4 systemic banks in Greece.
Research is the backbone of Eurobank Equities' platform, with a team of 4 professionals committed to generating actionable investment ideas by providing timely research products. We are committed to offering value-added services to clients by filtering market noise and providing insights on the multiple sectors that we cover. Our universe includes 26 - large, medium and small cap - companies whose market capitalization amounts to 80-85% of the total market capitalization of the Athens Stock Exchange. Our research team also maintains the capacity to generate ad-hoc research for micro-cap listed companies.
Our team has consistently gained recognition among institutional investors for its quality research, having ranked No. 1 team in Greece at the Extel Surveys of 2013-2016 and 2018. We have also been named Leading Brokerage Firm in Greece over 2014-2016 and in 2018.
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