# CE2004065EN.01008901.xml

| 13.3.2004 | EN | Official Journal of the European Union | CE 65/89 |
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13.3.2004

EN

Official Journal of the European Union

CE 65/89

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(2004/C 65 E/100)

WRITTEN QUESTION E-1713/03

by Ioannis Marínos (PPE-DE) and Stavros Xarchakos (PPE-DE) to the Commission

(23 May 2003)

Subject:   Operation of the capital market in Greece

Subject:

Between 1999 and 2001, a redistribution of income estimated at EUR 100 billion took place in Greece via the stock market. The sharp fall in the General Price Index on the Greek stock market (which began in 2000 and accelerated through 2001 and 2002) created social tension and bleak prospects for hundreds of thousands of Greek citizens who had invested their savings (or borrowed to invest) on the stock market. The entire situation has raised legitimate questions concerning the way in which the capital market in Greece is operated and supervised and the possibility of avoiding a similar situation in the future.

What is the Commission's view of the structure and operation of the capital market in Greece, with particular reference to the period 1999-2001? Did a similar redistribution of income via the stock market occur in other Member States of the EU?

Answer given by Mr Solbes Mira on behalf of the Commission

(26 June 2003)

(26 June 2003)

The Commission cannot confirm the figure mentioned by the Honourable Members regarding the losses made by investors on the Greek stock markets, but it certainly shares their concerns regarding the consequences of the fall of share prices on the Greek stock market.

However, it should also be considered that the sharp fall in the General Price Index of the Greek stock market followed a very sharp increase between 1996 and 2000. The modernisation of the stock exchange and the prospect of joining the Economic and Monetary Union (EMU) raised investors' expectations of returns on equity holdings in the late 1990's. The General Price Index on the Athens stock exchange increased by some 600 percent between 1996 and 1999. It has fallen subsequently by some 65 percent. This is undoubtedly a sharp fall, but is in line with trends on the majority of stock markets. Since January 2000, the main French index has fallen by some 50 percent, the German index by some 55 percent, the British index by some 40 percent.

Beginning with the deflation of the bubble in technology, media and telecommunications stocks, the fall in prices has spread to all sectors, reflecting investor concern about the prospects for corporate earnings amid a weak global economy and geo-political uncertainty, as well as a loss of confidence in corporate governance and market integrity. The Commission would like to stress that the rapid and complete implementation of all the measures in the Financial Services Action Plan, the initiatives in the area of corporate governance, as well as the rationalisation of the framework for Union-level regulation and supervision, will go a long way in raising the level of investor protection, strengthening the stability of the financial system, and increasing its efficiency, to the benefit of investor and companies alike.

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