Lenders led a record plunge in Greek equities as the Athens Stock Exchange reopened after a five-week shutdown, with restrictions in place due to capital controls.
Piraeus Bank SA and National Bank of Greece SA sank 30 percent, the maximum allowed by the Athens bourse. The benchmark ASE Index slumped a record 22 percent to 622.6 at 11:09 a.m. in Athens.
“The situation in Greek equity markets will have to get a lot worse before it gets better,” said Luca Paolini, Pictet Asset Management’s chief strategist in London. “There are still critical risks to be resolved.”
The exchange suspension came as Greek stocks had begun enjoying some renewed optimism after losing 85 percent of their value since 2007. The ASE rebounded 17 percent from its almost three-year low in June through the suspension. That trimmed its loss to 3.5 percent this year until June 26, the last day the exchange was open.
The Greek market came to a halt in June as Prime Minister Alexis Tsipras ended bailout talks with creditors by asking voters to decide in a referendum whether to accept the terms offered in exchange for emergency loans. The nation was forced to shut banks and impose capital controls.
The stock exchange remained closed, recording its longest halt since the 1970s, even after lenders reopened on July 20 with limited services, as Greek officials worked on rules to reopen the bourse with capital controls in place.
With bank withdrawals limited, Greek traders will only be able to buy stocks, bonds, derivatives and warrants with new money such as funds transferred from abroad, cash-only deposits, money earned from the future sale of shares or from existing investment account balances held at Greek brokerages, the Finance Ministry said in a decree on Friday.
No such constraints will apply to foreign investors, provided they were already active in the market before the imposition of capital controls.
During the shutdown, investors used a U.S.-listed exchange- traded fund as a proxy for Greek stocks. The Global X FTSE Greece 20 ETF fell 17 percent from June 26 through Friday. The fund plunged a record 19 percent the first day stocks in Athens were suspended. It advanced 2.6 percent on Friday.
Investors also kept an eye on American depositary receipts of National Bank of Greece SA, which tumbled 29 percent during the suspension.
The Greek ETF had been a popular one in 2015, with investors sending money to it every single week until the closure. In total, it gathered $281 million, heading for a record year of inflows. Its market value reached an all-time high of $367 million on June 25. Another ETF tracking Greek equities with listings in France, Germany and Italy remained halted during shutdown.
Some bond trading had been going on during the closure. BlackRock Inc., the world’s biggest money manager, bought Greek debt in the days following the nation’s agreement with its creditors, according to Michael Krautzberger, head of euro fixed income for the company in London.
Trading in Greek government debt was scant even before the closure. Data from the Bank of Greece’s electronic secondary securities market, or HDAT, showed volume across all maturities totaled 2 million euros ($2.2 million) in May, matching that of April, the least since February 2012. Trading plunged to zero in October 2011 after peaking at 136 billion euros in September 2004.
About 102,000 euros of Greek government bonds changed hands on the Luxembourg Bourse last week, according to Guy Weymeschkirch, head of markets and surveillance at the exchange. That’s similar to the volume before the bourse suspended trading at the end of June.
The ban on trading 25 Greek issuers — from government bonds to those of Alpha Bank AE and Hellenic Telecommunications Organization SA, was lifted on July 24. There was no trading last week on any non-government bonds, Weymeschkirch said.