Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Money / Personal-finance/  Greece’s stocks tumble 23% in first day of trading after shutdown
BackBack

Greece’s stocks tumble 23% in first day of trading after shutdown

Piraeus Bank SA and National Bank of Greece SA sank 30%

The ASE rebounded 17% from its almost three-year low in June through the halt. Photo: Reuters Premium
The ASE rebounded 17% from its almost three-year low in June through the halt. Photo: Reuters

London: Greek equities tumbled as the Athens Stock Exchange reopened after a five-week closure, with restrictions in place due to capital controls.

The benchmark ASE Index slumped a record 23% to 615.61 at 10:43 am in Athens. Piraeus Bank SA and National Bank of Greece SA sank 30%.

The exchange suspension came as Greek stocks began enjoying some renewed optimism after losing 85% of their value since 2007. The ASE rebounded 17% from its almost three-year low in June through the halt. That trimmed its loss to 3.5% this year until 26 June, the last day the exchange was open.

The Greek market came to a halt in June as Prime Minister Alexis Tsipras ended bailout talks with creditors by asking voters to decide in a referendum whether to accept the terms offered in exchange for emergency loans. The nation was forced to shut banks and impose capital controls.

The stock exchange remained closed, recording its longest halt since the 1970s, even after lenders reopened on 20 July with limited services, as Greek officials worked on rules to reopen the bourse with capital controls in place.

With bank withdrawals limited, Greek traders will only be able to buy stocks, bonds, derivatives and warrants with new money such as funds transferred from abroad, cash-only deposits, money earned from the future sale of shares or from existing investment account balances held at Greek brokerages, the Finance Ministry said in a decree on Friday.

Foreign investors

No such constraints will apply to foreign investors, provided they were already active in the market before the imposition of capital controls.

During the shutdown, investors used a U.S.-listed exchange- traded fund as a proxy for Greek stocks. The Global X FTSE Greece 20 ETF fell 17% from 26 June through Friday. The fund plunged a record 19% the first day stocks in Athens were suspended. It advanced 2.6% on Friday.

Investors also kept an eye on American depositary receipts of National Bank of Greece SA, which tumbled 29% during the suspension.

The Greek ETF had been a popular one in 2015, with investors sending money to it every single week until the closure. In total, it gathered $281 million, heading for a record year of inflows. Its market value reached an all-time high of $367 million on 25 June. Another ETF tracking Greek equities with listings in France, Germany and Italy remained halted during shutdown.

Bond trading

Some bond trading had been going on during the closure. BlackRock Inc., the world’s biggest money manager, bought Greek debt in the days following the nation’s agreement with its creditors, according to Michael Krautzberger, head of euro fixed income for the company in London.

Trading in Greek government debt was scant even before the closure. Data from the Bank of Greece’s electronic secondary securities market, or HDAT, showed volume across all maturities totaled €2 million ($2.2 million) in May, matching that of April, the least since February 2012. Trading plunged to zero in October 2011 after peaking at €136 billion in September 2004.

About €102,000 of Greek government bonds changed hands on the Luxembourg Bourse last week, according to Guy Weymeschkirch, head of markets and surveillance at the exchange. That’s similar to the volume before the bourse suspended trading at the end of June.

The ban on trading 25 Greek issuers—from government bonds to those of Alpha Bank AE and Hellenic Telecommunications Organization SA, was lifted on 24 July. There was no trading last week on any non-government bonds, Weymeschkirch said.

With assistance from Lucy Meakin and Tom Beardsworth in London.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 03 Aug 2015, 01:57 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App