Greece suffered its worst stock market bloodbath in decades on Monday, when it opened after a forced five-week closure, and new data showed a dismal outlook for the bailout-dependent country’s shrinking economy.
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Banking shares were heavily sold with the National Bank of Greece down to its 30% daily volatility limit.
“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.
But U.S. investors have relatively little to fear from the crash, even though there’s a good chance they’re in a mutual fund that has some Greek stocks.
In an interview with Ethnos newspaper on Monday, European Economic Affairs Commissioner Pierre Moscovici described an August deal as possible, but added it would be “ambitious”, suggesting that it would take hard work to achieve it.
Traders said buyers were not likely to start looking for bargains until yet lower levels were reached. “The outlook is not clear”. Any unexpected data points could result in larger than usual market movements due to the relatively thin trading volumes as the summer slowdown reduces trading activity. Shares in HSBC rose after the bank reported higher first-half earnings and announced the sale of its Brazilian unit to Banco Bradesco SA.
Trading was suspended in Athens in late June as part of capital controls imposed to stem an outflow of euros that threatened to collapse Greece’s banks and push the indebted country out of the euro zone. Greek banks then reopened on July 20. Strict limits on cash withdrawals remain, however.
Uncertainty over the fate of Greece’s economy, and its place in the eurozone, has seen bank customers withdraw a few €40 billion since December, leaving lenders dangerously low on cash and in need of urgent recapitalisation.
In the meantime, a month-to-month survey of enterprise and shopper confidence, the Financial Sentiment Indicator, fell for a fifth consecutive month in July to its worst degree since October 2012.
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.
A man takes a snapshot of a stock index in the lobby of the Athens Stock Exchange in Athens on August 3, 2015.
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.
“The (negotiation) timetable is truly pressing…”
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“A solution will be found, since the country needs a strong government”, Gerovasili told private Skai television.
