Greek shares anticipated to plunge as much as 20 per cent when stock exchange reopens

Greek banks are vulnerable due to the outflows of billions of euros from deposits over the last six months (Source: Getty)

The Athens Stock Exchange is anticipated to tumble by as much as 20 per cent as traders expect a tumultuous day of trading when the Greek stock market reopens tomorrow after a five-week closure.

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

The Greek stock exchange was closed on June 26, ahead of the government’s imposed capital controls to stop the possibility of capital flight from the country.

Read more: Greek markets to reopen on Monday

The bourse’s reopening comes as the country’s Prime Minister, Alexis Tsipras, agreed to begin negotiations on a new €86bn (£61bn) bailout deal.

Banks account for almost twenty per cent of the main Athens index and as Greece’s financial sector needs to be recapitalised, shares in banks are expected to take the largest hit.

Tsipras is expected to push for recapitalisation of the banking sector as part of any deal with Greece’s creditors. The IMF, however, has said it will refuse to provide new financing for Greece until Eurozone governments have reached an “explicit and concrete” agreement.

Read more: IMF may not participate in third Greek bailout

Talks on the deal will continue tomorrow, with a view to wrap up an agreement before 20 August, when €3.2bn is due to be paid to the European Central Bank.

However, some expect Tsipras to face a further backlash, after his party spent its first five months in government vehemently opposing a similar agreement before caving in to its creditors’ demands at the beginning of July. The creditors are the International Monetary Fund, the ECB and the European Commission.

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

Related articles