Greece's main stock index lost close to a fifth of its value on
Monday as it reopened for the first time in more than five
weeks.
The Athex Composite slumped close to 23% in the first few
minutes before recovering slightly to trade around 20% lower on the
day, according to FactSet data. The index was last open June
26.
Frances Hudson, a strategist at Standard Life Investments, said
the fall may be an overreaction but it showed that "things are
going to be very tough for Greece" despite a fresh deal with its
international creditors.
Some stocks were suspended, FactSet showed, but all constituents
that were trading were down at least 5%. Lenders National Bank of
Greece SA, Piraeus Bank SA, Eurobank Ergasias SA and Alpha Bank AE
were among the biggest fallers.
Greek banks had been closed along with the Athex after Greek
Prime Minister Alexis Tsipras said the country would hold a
referendum on whether to accept terms that its international
creditors were offering in return for fresh financial aid.
Greek voters rejected those terms, raising fresh doubts about
the country's future in the eurozone.
Later in July, the government eventually reached a compromise
with creditors, accepting some tough conditions, and the banks
reopened with restrictions on July 20.
Over the last 12 months, and taking Monday's sharp losses into
account, the Athex Composite has declined around 45% in value,
making it one of the worst-performing stock indexes globally.
Monday's stock declines look dramatic "because it's the market
trying to catch up on five weeks of events," said Simon Derrick,
head of market strategy at BNY Mellon. "But for a true indication
of investor appetite we should look at bond markets," he said.
On Monday, Greek government bond prices fell but remained near
levels seen over the past two weeks. Yields on Greece's two-year
bonds rose 0.16 percentage point to 21.0%. Ten-year yields rose
0.02 percentage point to 11.9%.
Short-term yields rising above those on longer-dated bonds is
often a sign that investors are worried about the risk of default.
Yields rise as bond prices fall.
Greek government bond prices slumped as the crisis intensified,
pushing two-year yields above 50% in the first part of July,
although trading was limited during the stock-market shutdown.
Separately Monday, data showed that the Greek Purchasing
Managers Index fell to 30.2 for the month of July, the lowest level
recorded in the series' 16-year history.
Christopher Whittall contributed to this article.
Write to Josie Cox at josie.cox@wsj.com
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