Greek stocks plunge, banks hammered, after shutdown

Greece’s main stock index plunged over 22 percent as it reopened Monday after a five-week closure, giving investors their first opportunity since June to react to the country’s latest economic crisis.

Banking stocks may take much of the brunt on Monday because Greece’s financial sector needs to be recapitalised.

Greece’s stock market closed with heavy losses Monday after a five-week shutdown brought on by fears the country was about to be dumped from the eurozone.

An employee of the Athens’ Stock Exchange stands behind a reception desk in Athens, Greece, on Monday, August 3, 2015.

Trading on the Athens bourse was suspended in late June as part of capital controls imposed to stem a debilitating outflow of euros that threatened to collapse Greece’s banks and hurl the indebted country out of the euro zone.

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. “Syriza lawmakers must fight to the last minute to stop the government signing a third bailout“. They reopened on July 20, but withdrawals and money transfers overseas remain restricted. Alpha Bank finished at minus 29.81 per cent while Eurobank fell 29.86 per cent.

Although Athens is in new bailout talks with its European Union partners the threat of political and economic instability remains.

Investors yesterday also offloaded shares in top companies such as gaming giant OPAP, electricity provider PPC, telecoms operator OTE and leading refiners HELPE, all shedding between 12 and 23 per cent.

“Pressure by sellers was high”.

And the banks, supported for the moment by the European Central Bank, are in dire need of recapitalization, a subject being discussed on Tuesday by the finance ministry and Greece’s worldwide lenders. “It is logical and anticipated by everyone”, stock market chairman Socrates Lazaridis told Bloomberg TV, noting that he expected the market to stabilize in a month’s time.

“The possibility of seeing even a single share rise in tomorrow’s session is nearly zero”, said Takis Zamanis, chief trader at Beta Securities. They can, however, use foreign bank accounts or make cash transactions.

The Greek economy is already forecast to contract by around 3.0 percent this year.

The capital controls have also forced many companies to send staff on mandatory vacation and disrupted the import of a wide array of goods, raising the prospect of shortages in the autumn according to market insiders.