For Greek stock traders exhausted by Monday's selloff, relief may not be imminent.
Given their first opportunity to trade for five weeks, investors spent Monday selling, sending the benchmark ASE Index down 16 per cent for the worst decline since at least 1987. It should've been worse, according to local brokers, who said routine tasks like buying and selling were often impossible due to emergency curbs enacted before the session began. The benchmark ASE Index lost 1.2 per cent to 659.94 at the close of trading in Athens, paring a retreat of as much as 4.9 percent.
“Without the restrictions, the drop would be steeper,” said Nikos Kyriazis, an equity sales trader at NBG Securities SA in Athens. “There are a lot of orders in the system that are not executable.”
Fractured trading worsened the sense of dread around Athens as losses in the ASE swelled to 23 per cent in the first minutes of the exchange reopening. The decline extended the rout in Greek equities that began in 2007 and has wiped 85 per cent of the value of companies listed there.
Under rules announced last week, stocks with extreme volatility were halted sooner than normal, while would-be buyers had to raise money from places other than their bank accounts. Less than 31 million ASE shares changed hands on Monday, the least since November.
The net effect is that it's going to take time for prices to reach levels that balance supply and demand, traders said.
“Greek people can't buy anything,” said Stavros Kallinos, head asset manager at Guardian Trust in Athens. “Even if people were looking to buy, they'll probably be on hold position for now, waiting for tomorrow and after tomorrow and see where things stand then.”
Slumps in two of the country's biggest lenders, Piraeus Bank SA and National Bank of Greece SA, were limited to the daily 30 per cent allowed by the Athens Stock Exchange.
Monday was not the day for the curbs to be enforced, said Thanassis Drogossis, head of equities at Athens-based Pantelakis Securities SA.
“They should have also widened the limit from minus 30 per cent,” Drogossis said in a message. “That would have allowed the discovery of a clearing price much earlier.”
In particular, the restrictions on bank withdrawals made it easier to sell than buy, traders said. If you were a local investor looking to purchase shares Monday, your funding was restricted to cash transferred from abroad or money that had been deposited as cash in the first place.
“The problem is that there is no demand at current levels, especially for Greek banks due to the forthcoming recapitalization needs,” said Alexandros Malamas, an equity sales trader at Piraeus Securities SA in Athens. “For sure banking stocks will fall more.”
Many individual shares saw a day of reckoning after enjoying gains through the first half of the year. Terna Energy SA, an Athens-based clean energy developer, slid 14 per cent after rallying 63 per cent in 2015 before the halt. Thrace Plastics Co. lost 16 percent after climbing 57 per cent in the year to date.
Eleven companies in the 60-member ASE fell more than 29 per cent, and more than half were financial services firms like Piraeus Bank and Inform P. Lykos SA, which makes smart cards for lenders and companies in other industries. Only one stock rose: consulting firm Euroconsultants SA, which climbed 2.8 per cent.
Evi Anagnostopoulou, an equities trader at Investment Bank of Greece SA, predicts Greek shares will drop another 10 per cent before stabilizing.
“No doubt that increased volatility will be the main characteristic in the following days,” said Anagnostopoulou.