The Athens stock market reopened on Monday, August 3rd for the first time in roughly five weeks. It was an ugly morning as stocks, trading at 17% lower, fell nearly 23% by late morning. Unsurprisingly, Greek banking stocks were the worst hit with Alpha Bank, Attica Bank, and Eurobank Ergasius, Bank of Piraeus and the National Bank of Greece all trading at or around 30% lower—the daily volatility limit. Similar losses were seen outside the banking industry stocks as well.
Furthermore, flash manufacturing PMI figures for July were down to 30.2, the lowest reading since data compilation began in 1999. An economic sentiment index for Greek reflected the dismal showings with its lowest reading level since October 2012. The survey was conducted by IOBE think tank and claimed capital controls and political uncertainty were weighing heavily on sentiment.
Traders braced themselves early Monday, accurately anticipating a day of losses and volatility. Greek traders told Reuters on Sunday, “that they expected a torrid day of losses when the stock market opened. Takis Zamanis, chief trader at Beta Securities, told the news agency that ‘the possibility of seeing even a single share rise in tomorrow’s session is almost zero.’ Meanwhile, the chairman of the Hellenic Capital Markets Commission told CNBC ahead of the open that his commission would monitor the market closely on Monday.” There will be no state intervention into the market, according to the chairman Kostas Botopoulos. The focus for the day will be on the losses among Greek banking stocks, which make up roughly 20 percent of the main Athens index. Restrictions are in place to stem capital flight. Capital control has been in effect for some time now for Greek banks, like the limit of 60 euros for withdrawals. Domestic investors can only buy shares with fresh money from abroad or cash they have to hand. Foreign investors are allowed to trade freely though.
The Greek bailout is still on shaky ground, with the IMF threatening to pull out and countries like Germany opposing debt relief. Greece needs the bailout to be agreed upon before the 3.2 billion euro debt repayment is due on August 20th. The proximity of the next debt deadline and the bloody market showing make Greece’s struggle an uphill one. If you would like to know more about how the Greek stock market and bailout can affect your financial investments, contact one of our advisors at Apex Financial Advisors today to learn more about insulating your wealth.