Investors issued a vote of no confidence in Greece’s economy Monday, dumping Greek stocks as trading on the Athens stock exchange resumed for the first time in five weeks.
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Greece is presently in intense negotiations with bailout lenders to barter the phrases of an enormous new rescue package deal within the subsequent two weeks.
Greek bank stocks suffered the most, hitting or nearing the daily trading limit of a 30% loss. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Some 60,000 companies have requested to relocate to neighboring Bulgaria, the association of Greek traders said last month.
The Athens stock exchange’s banking index, which measures the value of Greece’s four largest lenders, dropped 29.2 percent on Tuesday shortly after the markets opened.
The sources said the untapped emergency liquidity assistance (ELA) buffer had grown to about 5 billion euros from 1 to 2 billion euros at the height of Greece’s debt crisis, helped by tax and tourism inflows, and pension payments.
“Non-financial companies will have a better performance than the banks, since their prospects are brighter and are less exposed to the domestic market”, said Manos Chatzidakis, an analyst at Beta Securities. And there are no buyers because the Greek economy has been hard hit by the imposition of capital controls and the bank closures. To avoid defaulting on it, Greece would need money from the bailout program it is negotiating or, short of that, an interim loan from its creditors.
Trading was suspended in Athens in late June as part of capital controls to thrust an outflow of euros that threatened to crumble Greece’s banks and throw the obligated country out of the euro zone. Banks have reopened, however strict limits on cash withdrawals remain. “But for a true indication of investor appetite we should look at bond markets”, he said. The Greek economy showed bad news too, with figures for flash manufacturing PMI for July decreased to 30.2 – a reading considered to be the lowest from the time Markit began to compile data (2009).
Experts believe that much of the decline in sentiment is due to the imposition of capital controls.
Deputy Finance Minister Dimitris Mardas didn’t touch upon reviews that Athens might search a short-term mortgage to tide it over in case the talks should be prolonged. “We’re getting ready for what has been agreed upon, correcting any gaps which will seem”, Mardas advised personal Skai tv.
With investors anxious about a new bailout from the European Union and a worsening economy, they have since fallen to roughly the level they were at in 1990 and, while not as low as they were in 2012, are some 52 percent down on last year’s high.
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Running contrary to his promises to eliminate austerity once in power, the bailout has put major strain on Prime Minister Alexis Tsipras.
