Greek mar­ket blood­bath as ex­change re­opens

The China Post - - FRONT PAGE - BY DEREK GATOPOULOS

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

Bank shares suf­fered most, hit­ting or near­ing the daily trad­ing limit of a 30-per­cent loss. Mar­kets in the rest of Europe, how­ever, were largely un­af­fected.

The stock mar­ket and banks were closed on June 29, when the gov­ern­ment put lim­its on money with­drawals and trans­fers to keep a run on the banks from bring­ing down the fi­nan­cial sys­tem. Greeks were pan­ick­ing over the prospect that the coun­try could fall out of the euro af­ter its talks cred­i­tors broke down.

Greece has since then re­sumed talks with cred­i­tors and re­opened its banks. Strict lim­its on cash with­drawals re­main, how­ever.

Two sur­veys pub­lished 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.

“The neg­a­tive de­vel­op­ment is the re­sult of the sharp de­te­ri­o­ra­tion in busi­ness ex­pec­ta­tions in all ar­eas, but also a re­cent and sig­nif­i­cant de­cline in con­sumer con­fi­dence,” said the Foun­da­tion for Eco­nomic and In­dus­trial Re­search, or IOBE,

which con­ducts the sur­vey.

In­tense Ne­go­ti­a­tions

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 Aug. 20, when it has to re­pay more than 3 bil­lion eu­ros 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,” Mar­das told pri­vate Skai tele­vi­sion.

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 pro­gram.

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 fall.

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.

AP

(Top) An em­ployee of the Athens Stock Ex­change looks at stock prices dis­played on a ticker screen in Athens, Mon­day, Aug. 3. (Above) Euro­pean Com­mis­sion rep­re­sen­ta­tive De­clan Costello, front, ar­rives at the La­bor Min­istry in Athens, Mon­day.

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