After five weeks of strict capital controls the Greek stock exchange has reopened for ‘normal’ trading. Investors abandoned the flailing economy, dumping shares across the board.

Hardest hit were the banks. They registered the greatest-ever drop in share price – a staggering 16.23 per cent plunge. This eclipsed the previous worst drop of 15.03 per cent in 1987.

The ATHEX index went into freefall on Monday, clocking up its worst dive in the last 30 years, down to 668.06 points.

Financial experts are warning that the markets will get worse before they improve. A darkening economic climate and the insecurity over possible early elections are making already frightened investors terrified.

Prime Minister Alexis Tsipras has threatened to call early elections if his hugely unpopular concessions to EU creditors are not pushed through parliament.

Speaking in London, Luca Paolini, the chief strategist for Pictet Asset Management, said, “The situation in Greek equity markets will have to get a lot worse before it gets better. There are still critical risks to be resolved.

The country’s main banks averaged a 30 per cent drop. Alpha Bank closed the day down 29.81 per cent, while Eurobank dropped 29.86 per cent.

All the Greek majors were abandoned by investors: Gaming goliath OPAP, major electricity supplier PPC, telco OTE, and major refiners HELPE lost between 12 and 23 per cent of their value.

The chairman of the Greek stock market, Socrates Lazaridis, said on Bloomberg TV, “Pressure by sellers was high. It is logical and anticipated by everyone.”

However, Mr Lazaridis also noted that 65 per cent of traders were foreign.

The loss of $A 60.09 billion from bank withdrawals since December has lenders in a vulnerable position. Depositors are reluctant to support lenders because of the uncertainty of Greece’s commitment to staying in the Eurozone – and therefore the security of bailout loans.

Greek ministers are finalising the terms for a new three-year bailout deal worth up to 86 billion to the Greek economy. They are meeting with auditors from the IMF and EU. The carnage on the Greek stock market can have done little to improve the confidence of these investors.

About The Author

Someone you can depend on to respect you and care for your dog. Let me help you give your dog the life it deserves.

Leave a Reply

Your email address will not be published.