Greek stockmarket re-opens – and crashes

The Greek stockmarket, closed this the latest crisis, reopened this week and promptly plunged.

754-athex-634

The Greek stockmarket, closed when the latest crisis came to a head in late June, re-opened last Monday and promptly plunged. It closed 16% down, its worst performance since the global crash of 1987. The banks, which had been bleeding capital before they were closed for three weeks, fell by 30%, the daily limit, in a few minutes. The Athens General index slipped a little further the next day.

Grim data covering the past few weeks rattled investors too. An index tracking the manufacturing sector showed that activity plummeted to a record low last month. A federation representing small businesses said their average turnover fell by 48% in July.

What the commentators said

That's "quite an achievement", considering the economy is already 30% smaller than it was in 2008, said Louise Cooper in The Times. And it could complicate further discussions over Greece's third bailout package.

The International Monetary Fund (IMF), one of its creditors, is basing its forecast of Greece's debt sustainability, and the bailout cash it needs, on GDP this year being the same as 2014. That now looks "absurdly and laughably optimistic". The bailout sum under discussion has already jumped from around €30bn in early July to the €86bn being negotiated now.

What's more, said Andrew Lilico in The Daily Telegraph, the IMF may be loath to participate in the bailout. It wants Greek debts written down and the government to demonstrate a strong commitment to structural reform. Yet the Greek government is deeply split and Europe won't countenance another write-down, so neither of its wishes will be fulfilled.

If the IMF pulls out, Europe may have to stump up even more, which could be "the last straw for certain members". With the bailout already looking inadequate and the politics getting more and more complicated, don't rule out a Grexit.

Recommended

Are recession fears justified? Maybe it’s time to look on the bright side
Economy

Are recession fears justified? Maybe it’s time to look on the bright side

There's a lot to feel nervous about right now, and many people are worrying about an impending recession. But it's by no means certain, says John Step…
28 Jan 2022
No easy answers to Europe’s gas crisis
Energy

No easy answers to Europe’s gas crisis

Europe’s gas crisis is a long way from over, with some analysts thinking that gas prices could remain twice as high as normal until 2025.
28 Jan 2022
Tech stock sell-off may be a good signal
Stockmarkets

Tech stock sell-off may be a good signal

The tech-stock-heavy Nasdaq index is down 15% since its November peak. But what’s bad for tech investors might be good for society as we move into a p…
28 Jan 2022
The Federal Reserve has turned inflation-fighter – how do you invest now?
US Economy

The Federal Reserve has turned inflation-fighter – how do you invest now?

The US Federal Reserve has become much more hawkish on inflation and less concerned with the markets' reaction to rising interest rates. John Stepek e…
27 Jan 2022

Most Popular

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022