Greek markets crash on gov’t pledges

A number of policy statements by new government ministers had foreign investors rushing for the exit of the Athens bourse on Wednesday, while Greek bond yields soared. The accumulated losses of the banks index totaled 43.81 percent just three sessions after the SYRIZA election victory on Sunday.

Within Wednesday’s seven-hour session the bourse lost over 5.7 billion euros of its capitalization as the Athens Exchange (ATHEX) general index closed at 711.13 points, plunging 9.24 percent from Tuesday’s 783.53 points. The large-cap FTSE/ATHEX 25 index contracted 5.04 percent to end at 239.09 points.

It was the second-highest daily drop for the benchmark since Greece’s accession to the eurozone, the highest being on December 9, 2014, the day after the announcement of the presidential vote, which took Greece into the pre-election period.

“We have had many crashes in recent years, both in society and on the stock market. In every period of political change there is a climate of turbulence,” Deputy Prime Minister Yiannis Dragasakis stated on Wednesday. “The government cares about bank stocks growing and operating smoothly. We are open to ideas and proposals aimed at strengthening the banks,” he added.

Yet bank stocks dropped a staggering 26.67 percent on Wednesday on fears about the upcoming changes to local lenders’ administrations and the Hellenic Financial Stability Fund (HFSF).

Piraeus Bank fell 29.26 percent, Alpha dropped 26.76 percent, Eurobank gave up 25.93 percent and National declined 25.45 percent. Public Power Corporation followed with losses of 13.93 percent. Folli Follie grew 1.54 percent.

The Greek bourse is heavily dependent on foreign investors, who between them control an estimated 61.5 percent of the local market.

In total 25 stocks posted gains on Wednesday, 91 took losses and 12 ended unchanged. Turnover came to 194.6 million euros, up from Tuesday’s 193.3 million.

The yield on three-year notes jumped 270 basis points to 16.73 percent and five-year bond yields hit 13.5 percent to reach their highest level since the 2012 debt restructuring. The 10-year benchmark yield soared to 10.2 percent.