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Greek shares free-fall as market reopens

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Greece’s stock exchange reopened Monday with a drop of more than 22 percent after a five-week shutdown imposed by the country’s debt crisis and capital controls.

The ATHEX plunged to 615.72 points a few minutes after opening at 0730 GMT, down 22.82 percent from its June 26 close. The country’s main banks took a heavy blow at the opening with drops of around 30 percent.

The nation’s top four lenders – Piraeus Bank, National Bank, Alpha Bank, and Eurobank – were biggest fallers, all down by 30%, the maximum allowed. Banks make up about a fifth of the index.

The bourse was shut just before Athens imposed capital controls at the height of the debt crisis.

Traders had predicted sharp losses as a result of pent-up trading.

In accordance with conditions laid down by the government and the European Central Bank, local investors are not allowed to buy shares with money from their bank accounts, only with cash kept in safe deposit boxes or at home.

Meanwhile, data released on Monday showed that Greek manufacturing activity plunged in July to its lowest level on record as a three-week bank shutdown caused new orders to dive and created serious supply problems.

“Naturally, pressure is expected, markets will not fail to comment on such an extensive shutdown,” Constantine Botopoulos, head of the capital markets commission, told Skai radio.

“But we must not get carried away. We must wait until the end of the week to see how the reopening will begin to be dealt with more coolly.” The stock exchange operates as normal for foreign investors but local traders face limits on their transactions as part of the capital controls imposed by the government last month.

The restrictions mean that Greek investors are unable to finance the purchase of securities by taking money from their bank accounts in Greece. They will, however, be able to use foreign bank accounts or make cash transactions. The volatility cap has been reduced from 30 percent to 20 percent during the first three days of trading.

The country’s lenders are in a vulnerable position because of outflows of billions of euros from deposits over the past six months. Some 40 billion euros ($44 billion) has been withdrawn from Greek banks since December, according to the country’s banks association, amid fears over the fate of the Greek economy.

The reopening of the stock market comes after senior EU and IMF auditors held their first meetings with Greek ministers to finalise a new three-year bailout for the country which could be worth up to 86 billion euros ($94 billion).

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