Greece faces real chance of demotion

SEOUL – Greece faces a serious chance of demotion to advanced emerging market status and has a long way to go to retain its current developed designation, the chief executive of global index compiler FTSE said yesterday.

FTSE retained Greece on a watch list for possible demotion for a second consecutive year on Thursday following its 2007 annual review of its country classifications, saying it still fell short of five criteria. “There’s a real chance that Greece will be demoted,” Mark Makepeace, chief executive of FTSE, told Reuters in an interview in Seoul.”They are making progress but clearly they’ve got a long way to go,” he added.In its review, FTSE noted Greece had fallen short of developed market requirements in five criteria, including easing restrictions on off-exchange transactions and short selling.FTSE added it would work with Greek exchange and regulatory authorities to find solutions by the first half of 2008.To Makepeace, some of the problems in Greece also appeared linked to the size of the market.”It is a relatively small and closed market in terms of community and that just exacerbates some of the issues.”But Greek’s bourse operator said it was confident of avoiding a demotion.”I am certain Greece will have no problem fulfilling the five criteria before the evaluation by FTSE in 2008,” Spyros Kapralos, Hellenic Exchanges CEO told Reuters in Athens.Any demotion would be announced next year and implemented in 2009.Makepeace was in Seoul as part of index compiler’s announcement of its annual review, in which South Korea and Taiwan were retained at advanced emerging market status, dashing the hopes of investors who had been looking for an upgrade.But Israel moved up to developed market status, after being placed on a watch list for such a move just last year.Makepeace said the progress in satisfying its criteria had been rapid.”They have adapted their markets for the international investor,” the FTSE’s chief executive said.Israeli markets have rallied this year, with the blue chip Tel Aviv 25 index up 18 per cent so far this year as of Wednesday’s close.Among FTSE’s other decisions, Pakistan will be removed from its Global Equity Index Series (GEIS) from June 2008, after failing to satisfy some minimum requirements, and Makepeace said it remained a long way from winning re-admission.Nampa-Reuters”There’s a real chance that Greece will be demoted,” Mark Makepeace, chief executive of FTSE, told Reuters in an interview in Seoul.”They are making progress but clearly they’ve got a long way to go,” he added.In its review, FTSE noted Greece had fallen short of developed market requirements in five criteria, including easing restrictions on off-exchange transactions and short selling.FTSE added it would work with Greek exchange and regulatory authorities to find solutions by the first half of 2008.To Makepeace, some of the problems in Greece also appeared linked to the size of the market.”It is a relatively small and closed market in terms of community and that just exacerbates some of the issues.”But Greek’s bourse operator said it was confident of avoiding a demotion.”I am certain Greece will have no problem fulfilling the five criteria before the evaluation by FTSE in 2008,” Spyros Kapralos, Hellenic Exchanges CEO told Reuters in Athens.Any demotion would be announced next year and implemented in 2009.Makepeace was in Seoul as part of index compiler’s announcement of its annual review, in which South Korea and Taiwan were retained at advanced emerging market status, dashing the hopes of investors who had been looking for an upgrade.But Israel moved up to developed market status, after being placed on a watch list for such a move just last year.Makepeace said the progress in satisfying its criteria had been rapid.”They have adapted their markets for the international investor,” the FTSE’s chief executive said.Israeli markets have rallied this year, with the blue chip Tel Aviv 25 index up 18 per cent so far this year as of Wednesday’s close.Among FTSE’s other decisions, Pakistan will be removed from its Global Equity Index Series (GEIS) from June 2008, after failing to satisfy some minimum requirements, and Makepeace said it remained a long way from winning re-admission.Nampa-Reuters