(MENAFN- Khaleej Times)Greece's banking stocks plunged for the second day in a row on Tuesday dragging the main Athens index down in a graphic illustration of the country's financial and economic woes.
There were signs however that the rout that took ?8 billion off the market on Monday may be ending as already historically low valuations fall to levels at which investors start moving back in. The banking index comprising the four major lenders was down 27.1 per cent managing to keep above the 30 per cent daily loss limit at which trading is halted. It hit that limit on Monday. This was partly because there were some buyers on Tuesday for National Bank of Greece and the smaller Attica Bank both down 22 percent. The overall Athens General Index which shed a record 16.2 percent on Monday was down a far more modest 1.4 per cent on Tuesday. That suggested that without the banks which hold a weighting of around 20 per cent the index would have risen on the day. "Non-financial stocks were pressured a lot and we are seeing a rebound. They will likely balance out at a new level in the next few days meaning volatility will ease" said analyst George Doukas at Piraeus Securities. Among gainers were gaming group OPAP up 4.6 per cent and Aegean Airlines 8.8 per cent. Some other tourism-related companies also did well. There was no spillover evident from Greece to other European markets. Many investors have cut their exposure to Greece and are focusing more on the state of core markets such as Germany and France. Greek shares resumed trading on Monday after a five-week suspension as part of capital controls imposed to stem a debilitating outflow of euros that threatened to cause a banking collapse and force the indebted country out of the euro zone. With investors worried about a new bailout from the European Union and a worsening economy they have since fallen to roughly the level they were at in 1990 and while not as low as they were in 2012 are some 52 per cent down on last year's high. Although Athens is in new bailout talks with its European Union partners the threat of political and economic instability remains high. And the banks supported for the moment by the European Central Bank are in dire need of recapitalisation a subject being discussed on Tuesday by the finance ministry and Greece's international lenders. It has been estimated by both Greek banks and the creditors that between ?10 billion and ?25 billion ($11 billion-27.5 billion) is needed. The economy meanwhile has reversed course and is heading back into recession. On Monday a survey showed Greek manufacturing activity plunged to a record low as new orders plummeted and the three-week bank shutdown caused serious supply problems. Economic sentiment hit its lowest level in almost three years in July a report by the IOBE think tank showed. - Reuters
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