ATHENS: Greece’s stock exchange took a historic beating on Monday as trading resumed after a five-week shutdown forced by capital controls, with the main index registering its greatest-ever drop of 16.23 per cent and bank shares particularly hard hit.

The ATHEX index plunged to 668.06 points on its worst fall in nearly 30 years amid a worsening economic climate and the prospect of early elections in the coming months.

The previous worst loss in the stock market’s history was a 15.03pc drop in 1987.

“The situation in Greek equity markets will have to get a lot worse before it gets better,” said Luca Paolini, Pictet Asset Management’s chief strategist in London.

“There are still critical risks to be resolved.”

The country’s main banks took a heavy blow, with National Bank and Piraeus falling to the maximum allowed level of minus 30pc.

Alpha Bank finished at minus 29.81pc while Eurobank fell 29.86pc.

Investors also offloaded unreservedly shares in all the top Greek companies, including gaming giant OPAP, main electricity provider PPC, top telecoms operator OTE and leading refiners HELPE, which were also shedding between 12 and 23pc.

“Pressure by sellers was high. It is logical and anticipated by everyone,” stock market chairman Socrates Lazaridis told Bloomberg TV, noting that he expected the market to stabilise in a month’s time.

“After five weeks of non-transacting ability, it was important to incorporate the changes that have taken place in the international environment of capital markets, and also on the local environment where there was a number of important changes,” Lazaridis said.

“We were not expecting something different today,” said analyst Manos Hatzi­dakis of Beta Securities.

‘Insecurity pervades market’

“The stock exchange has not been closed for a month since 1974... This is a risk factor especially for major investors.”

“This is reflected today with great intensity... It is a sign of the insecurity that pervades the market,” he said.

The stock exchange operates as normal for foreign investors but local traders face limits on their transactions as part of the capital controls imposed by the government last month.

As a result of the restrictions, Greek investors cannot buy securities with money from their bank accounts in Greece. They will, however, be able to use foreign bank accounts or make cash transactions.

Lazaridis, the stock market chairman, noted that up to 65pc of investors present on the Athens bourse are foreign.

The country’s lenders are in a vulnerable position because of outflows of billions of euros from deposits over the past six months.

Some $44bn has been withdrawn from Greek banks since December, according to the country’s banking association, as depositors hedged their bets on whether the country would stay in the eurozone.

The reopening of the stock market comes after senior EU and IMF auditors held their first meetings with Greek ministers to finalise a new three-year bailout for the country that could be worth up to 86bn euros ($94bn).

The Greek economy is already forecast to contract by around 3pc this year.

Published in Dawn, August 4th, 2015

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