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The Greek stock market has always been connected to bank shares that are the main parameter in shaping price indexes. In terms of both capitalisation and participation in shaping the indexes, the banks’ "pie" has always been dominant.

Over the past three years, this situation has changed due to the ongoing bank recapitalisation but at the end of 2015, once the calculation of shares of the National Bank of Greece is completed, their involvement in the indexes will regain weight.

Following the recapitalisation, the redistribution of the Greek banks’ shares and the increase in the value of shares in all indexes in whose calculation they are involved, it is expected that the Greek market will have a better vision for the future, relieved from so many technical difficulties.

Until then, however, significant turmoil and price volatility will continue to mark the short time that remains until the end of the year. After the restructuring of the MSCI index portfolios of Alpha bank and Eurobank and the small receipts obtained by all the shares involved in the formation of the index, the Greek market will "experience" the changes in the National Bank of Greece and Piraeus Bank.

A critical role in the pricing of bank shares will be played by the intermediary funds that, informally, and at the expense of passive funds, are "collecting" the shares of Alpha Bank and Eurobank in the first stage and the shares of the National Bank of Greece and Piraeus Bank in the second. An important parameter is whether there will be new receipts or losses, or any other significant change in the remaining market shares.

The fact that the main index of the Athens Stock Exchange reached 560 basis points on 2 December was a good occasion and a technical level for its increase, since a possible obstacle to an immediate reaction would have put the market in very serious conditions to avoid the fall of the index below the historical lowest 470 basis points.

Theoretically, 560-670 basis points for the main index and 160-220 points for the FTSE/XA Large Cap include both the worst- and best-case scenario for the year-end in terms of the Greek securities market.

Bank shares will play a leading role in the development of the market in 2016 too. Particularly important will be the fact that the new shares reflect 0.3-0.4 times their tangible book value (TBV), while based on their assessments Greek banks are among the cheapest European banks with discounts of more than 50% compared with banks in the other southern European countries.

Based on the actions initiated on the Athens Stock Exchange during the first days after the offering of the new shares, on the first reports and the target prices offered by the analysts, the first findings and critical share prices in the next period will be as follows:

For Alpha Bank, the lower limit for the time being has been 1.80 euro. It is about 10% lower than the price increased by the bank and 25% lower compared with the first day of public offering of the new shares. The bank recapitalisation and the change in the composition of shareholders have increased the price to a value above that of the share capital increase, which is the main parameter for comparison with the previous period. So far, Goldman Sachs, Wood & Company and HSBC have given positive recommendations for the stock, the target prices being in the range of 3.30-4.66 euro. Among the Greek stock companies, IBG also has a positive view on the stock, at a target price of 3.88 euro.

For Eurobank, which is also slightly above its increased price of 1 euro, so far the lower limit has been 0.892 euro. Since the launch of public offering at 1.40 euro, the share price has fallen by 30%. With the exception of Goldman Sachs whose position is neutral with a target price of 1.45 euro, the remaining stock companies, namely Wood & Company and IBG, are recommending to customers that they buy at respective target values ​​of 1.30 euro and 1.94 euro.

For Piraeus Bank the lower limit is 0.205 euro. So far, the bank has not changed the price due to the change in share capital, although it is close to 0.30 euro. Goldman Sachs, Wood & Company and HSBC are neutral in terms of recommendations and the target prices set are 0.45, 0.38 and 0.50 euro respectively. In contrast, the Greek stock company IBG is positive, recommending a target price of 0.48 euro.

Despite the scarce data currently available on the National Bank of Greece and although it is too early to forecast the course of its share, the expectations are for its price to be in the range of 0.252-0.309 euro. So far, the target price of the share during the sell-side process is almost two times higher than the values previously mentioned and IBG has set it at 0.60 euro and Wood & Company at 0.50 euro.