Greek shares ‘set to plunge 20%’ as stock exchange reopens

The Athens Stock Exchange is set to plunge by as much as 20% on Monday when trading finally resumes after a five-week closure, traders have predicted.

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

Traders said they expect sharp losses as a result of pent-up trading and fears about Greece’s worsening economy.

The stock exchange is due to reopen at 8:30 CET.

Takis Zamanis, chief trader at Beta Securities, is among the pessimists. “The possibility of seeing even a single share rise in tomorrow’s session is almost zero,” he said.

“There is a lot of uncertainty about the government’s ability to sign the... bailout on time and for possible snap elections.”

Shares in banks are likely to be particularly hard-hit because Greece’s financial sector needs to be recapitalised.

A report in Avgi newspaper, which is close to the government of Prime Minister Alexis Tsipras, suggested Athens was asking for about €10 billion this month for bank recapitalisation.

Banks account for about a fifth of the main Athens index. National Bank of Greece’s US-listed stock has fallen about 20% while the Athens exchange has been closed.

One asset manager at a Greek fund said: “The focus will be in the bank shares – they will suffer more because their investors have to face a dilution from the [expected] recapitalisation of the sector.”

Greek banks will not make a profit this year and are suffering from an increase in bad loans due to the crisis, the manager said.

“It would be realistic to expect a decline of about 15-20% at the opening of the market on Monday,” he added.

Although Greece struck a bailout deal with its creditors last month, political in-fighting in Athens over the conditions could still result in Tsipras calling an early election.

The Greek economy has begun to reverse the gains it was making before Mr Tsipras’s Syriza-led coalition took power in January on an anti-austerity platform.

The European Commission expects Greece to go back into recession this year, with the economy contracting by between 2% and 4%.

The Greek economy was in recession for six years until 2014.