13th Jun 2021

Athens stock exchange to reopen

  • The stock exchange is opening after five weeks of closure (Photo: Wayne Lam (Ramius))

The Greek stock market opens Monday (3 August) after five weeks of closure meanwhile the political tensions surrounding the Greek crisis continue to simmer as the French finance minister criticises his German counterpart for 'Grexit' plans.

Heavy losses are expected as trading in the Athens bourse resumes after being closed since 26 June just before capital controls were imposed to stop the flight of money out of the country when Greece and its creditors failed to reach a deal.

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  • Athens and its creditors have to agree a 'memorandum' on what reforms the country needs to do in return for cash by 20 August, when a €3.2bn payment to the European Central Bank falls due (Photo: Wendy House)

Since then there has been a preliminary agreement on a third bailout of up to €86bn for Greece but the terms attached to the money are expected to be tough with both sides sceptical about whether it can be implemented.

Banking shares are set to be at the centre of the uncertainty as the country's financial sector needs to be recapitalised.

"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,” one asset manager at a Greek fund told Reuters.

On top of this comes uncertainty about whether a full bailout deal will be reached, as well as Greece's deteriorating economy - the European Commission has suggested the economy could contract by up to 4 percent in 2015.

Athens and its creditors have to agree a 'memorandum' on what reforms the country needs to do in return for cash by 20 August, when a €3.2bn payment to the European Central Bank falls due.

Adding to the questions over the tight deadline is the role of the International Monetary Fund (IMF). It has said it will take part in negotiations on a new programme but won't commit to taking part in it until the Europeans agree to write down some of Greece's debt to make it sustainable.

Not having the IMF fully onboard is expected to make it tougher still to pass any deal through the German parliament, however.

Meanwhile Greek prime minister Alexis Tsipras is having trouble selling the tough terms of the deal to his Syriza party. He recently managed to avert a party referendum on the issue but the question will loom large in September when Syriza is due to hold a congress on the bailout which may lead to snap elections.

The politics surrounding the Greece bailout continues to have wider repercussions as eurozone politicians disagree over how to approach Greece and how to reform the eurozone's institutional architecture to make it more robust.

One of the major faultlines exposed in recent weeks is between France and Germany. Paris has worked hard to keep Greece in the eurozone while Germany, largely guided by finance minister Wolfgang Schaeuble, has indicated it is open to Athens leaving the single currency.

The split essentially boils down to a political approach to do whatever it takes to keep Greece in the euro - backed by France and Italy - and a rules-based approach where flouting of the agreed conditions should have consequences - backed by Germany.

French finance minister Michel Sapin in an interview with Handelsblatt said that he thought Schaeuble's temporary 'Grexit' idea was "wrong".

"If you allow a temporary departure, that means: every other country that finds itself in difficulties will want to get out of the affair via an adjustment of its currency," Sapin said.

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