News World News

Wednesday 25 April 2018

Greek firms lose billions as stock market reopens

An employee of the Athens Stock Exchange speaks on the phone in the reception hall in Athens (AP)
An employee of the Athens Stock Exchange speaks on the phone in the reception hall in Athens (AP)
The Athens Stock Exchange has been closed for more than a month

Greece's top companies lost billions in market value in a matter of minutes when the stock exchange plunged upon reopening after a five-week closure.

The main stock index shed over 22% soon after opening, as traders got their first opportunity since late June to react to the latest twists in the country's economic drama.

The index closed 16.2% lower, with bank shares hitting or nearing the daily trading limit of a 30% loss.

"There's a sense of panic," said Evangelos Sioutis, financial analyst and head of equities at Guardian Trust. He noted some traders are selling stock merely to raise cash because there is so little liquidity in the Greek economy.

"There are no buyers," he said. "The outlook is not clear."

Markets in the rest of the world, however, were largely unaffected, a sign that investors outside Greece have now largely cut off ties with the country after years of crisis. European shares closed higher.

Greece's stock market and banks were closed on June 29, when the government also put limits on money withdrawals and transfers to keep a run on the banks from bringing down the financial system.

While the banks have reopened, s trict limits on cash withdrawals remain.

Two surveys published on Monday illustrate the extent of the damage wreaked on the Greek economy in July by the bank closures, money controls and general uncertainty over the country's future.

Financial information company Markit said its gauge of manufacturing activity in Greece plummeted during the month to 30.2 points, its lowest ever reading, despite improvements across the rest of the 19-country eurozone.

"Manufacturing output collapsed in July as the debt crisis came to a head," Markit economist Phil Smith said.

"Factories faced a record drop in new orders and were often unable to acquire the inputs they needed, particularly from abroad, as bank closures and capital restrictions badly hampered normal business activity."

Meanwhile, a monthly survey of business and consumer confidence, the Economic Sentiment Indicator, fell for a fifth consecutive month in July to its worst level since October 2012.

Greece is currently in intense negotiations with bailout lenders to negotiate the terms of a massive new rescue package in the next two weeks.

The country needs to complete the talks and get more loans before August 20, when it has to repay more than 3 billion euro (£2.1 billion) to the European Central Bank.

Deputy finance minister Dimitris Mardas did not comment on reports that Athens could seek a short-term loan to tide it over in case the talks have to be extended.

"The (negotiation) timetable is truly pressing... We are preparing for what has been agreed upon, correcting any gaps that may appear," Mr Mardas said.

Negotiators from the European Union and International Monetary Fund are seeking faster cuts in early retirement plans set out by the government, and stricter conditions for a tax arrears payment programme.

Prime Minister Alexis Tsipras is facing opposition to the new bailout from within his left-wing Syriza party that could force him to call an early election in the autumn.

Syriza dissenters are openly calling for a return to the drachma, but failed last week to force an emergency party conference before the bailout negotiations are completed.

"The government has to choose between a humiliating agreement to sign a third bailout, or abandon the agreements reached in Brussels and seek alternatives for a positive course out of this crisis," former welfare minister and prominent dissenter Dimitris Stratoulis said over the weekend.

Press Association

Today's news headlines, directly to your inbox every morning.

Editors Choice

Also in World News