After the Athens stock market opened for business after a five-week hiatus on Monday, the Greece’s banking-sector index saw 64 per cent of its value shaved off in the first three days of trading, in increments of almost 30 per cent a day – the daily loss limit.
The bank losses came as the wider Athex Composite Index lost ‘just’ 19 per cent in the same period, as investors grappled with what’s next for the country’s beleagured economy.
“Investors have to reassess the risk in terms of Greek banks and the risk of their holdings. It is obviously not a pleasant scenario and the sell-off has been quite considerable,” said Richard Perry, market analyst at Hantec Markets.
For the banking index, the weekly loss is on track to be 59 per cent, the biggest ever and far exceeding a 40 per cent wipe-out in May 2013.
For the benchmark Athex, it looks likely to suffer 16 per cent losses, its fourth-worst week ever, after putting in its biggest one-day slide in the index’s history at the begininng of the week.
The projection comes even after both the banking index and the Athex staged a rebound in Thursday’s trade, up 13 per cent and 3.7 per cent respectively.
“The longer-term scenario remains pretty bleak for Greece and its banks. Nothing particular positive has come out of [the bailout discussions] – there has been no write-down of debt and there’s been no real long-term solution. It’s just effectively kicking the can down the road,” Mr Perry said.
Greek banks have been surviving on a crisis lifeline thrown to them by the European Central Bank, through the emergency liquidity assistance.
Since reopening on July 20, customers have reportedly deposited about €1 billion in Greek banks, easing some of the pressure on the banking system.
Source: MarketWatch