Stocks rally on election results
Greek shares opened strongly on Monday after voters handed conservatives which back the country’s bailout deal a narrow election victory, breaking political deadlock and easing worries about a sudden exit from the euro.
The Athens bourse’s benchmark stock index was up 6.65 percent at 0803 GMT with bank shares up 15.7 percent.
“It is a relief rally. The stock market is cheering the election outcome with eyes now focused on the formation of a new government and its policy priorities,» said analyst Manos Giakoumis at Euroxx Securities.
Greece’s battered stock market had closed with gains of 1.85 percent on Friday, with banks gaining 8.6 percent. Some traders had discounted a favourable outcome in the second round of parliamentary elections that were held on Sunday.
Victory for the New Democracy party, which will seek to form a coalition with other parties backing the international aid deal that is keeping Greece afloat, lifted a cloud of uncertainty and reduced the risk of an imminent rupture with its euro zone peers.
“I don’t think the relief rally will be exhausted in one day. Stock prices will adjust upwards as the market reacts to the fact that an exit from the euro zone becomes a smaller probability after the election outcome,» said Theodore Krintas, head of wealth management at Attica Bank.
The bourse’s banking index was outperforming the broader market with Eurobank leading the rally, up 22.8 percent, followed by National Bank and Piraeus which were adding 18.5 and 17.8 percent respectively.
“The stock market was oversold with prices at rock bottom. Whether the rally will continue will depend on the perceived duration of the new government that will be formed. This is the bet,» said Phaedon Tamvakakis, head of fund managers Alfa Trust with assets of 700 million euros. [Reuters]
