The Greek stock market is set to reopen on Monday as talks continue with the country’s creditors on a new multi-billion-euro bailout. Photograph: Orestis Panagiotou/EPA
Greek investors expect a tumultuous day’s trading when Athens’ stock market reopens on Monday after a five-week shutdown.
The resumption of trading in Greek stocks will be the latest step back towards economic normality, after the prime minister, Alexis Tsipras, struck a deal with the country’s creditors to open talks on an €86bn (£61bn) third bailout.
But with stringent conditions, including new austerity measures, expected to be attached to any fresh rescue deal, and business confidence shattered by weeks of political chaos, shares are expected to sell off sharply.
“The possibility of seeing even a single share rise in tomorrow’s session is almost zero,” said Takis Zamanis, chief trader at Beta Securities. Other traders predicted shares could fall by up to 20%.
The outlook for the Athens bourse was not helped overnight as Asian stocks continued to fall thanks to a deepening selloff in commodities and concerns over slowing growth in China.
China’s factory activity shrank more than initially estimated in July, contracting by the most in two years as new orders fell, according to a private survey that dashed hopes that the economy may be steadying.
Stock markets across Asia declined with Japan’s Nikkei down nearly 0.5%, Hong Kong’s Hang Seng down 1% and South Korea’s Kospi falling 0.9%.
Bank stocks, which make up a fifth of the main Athens share index, are expected to be hit particularly hard, after the lengthy bank closures and imposition of capital controls, as the radical Syriza government sought to prevent the country being forced out of the euro.
Tsipras and his colleagues are expected to seek a recapitalisation of the banking sector as part of any deal with Greece’s creditors.
Talks on a fresh bailout began on Friday, with the reviled “troika” of creditors now expanded to a quartet, as the EU’s bailout fund, the European Stability Mechanism, joined the International Monetary Fund, the European commission and the European Central Bank.
The IMF has repeatedly made clear that it will refuse to provide any new financing for Greece until eurozone governments have made a concrete offer of debt relief; and the Syriza government has instituted economic reforms.
The eurozone is providing a €7bn bridging loan to meet Greece’s financing needs in the coming weeks, including the cost of meeting a €3.2bn debt repayment due to the ECB on 20 August. But more short-term funding may be needed before the IMF is ready to commit extra funds.
Tsipras also faces an uphill struggle to win over fellow members of his Syriza party to the reforms he was forced to pledge in exchange for the prospect of new money.
In the wake of the marathon talks with fellow eurozone leaders, Tsipras managed to pass two packages of so-called “prior actions”, in the Athens parliament aimed at reassuring Greece’s creditors – but only with the support of opposition MPs.
Syriza will hold a special party conference next month to consider whether to back Tsipras’s stance, and he has warned that without his party’s support he may be forced to call snap elections.
A report in Sunday’s Avgi newspaper, which is close to Tsipras’s government, suggested Athens is seeking about €10bn to prop up its banks. National Bank of Greece’s US-listed shares have lost about 20% of their value while the Athens exchange has been shut.
The ECB’s decision to limit the amount of aid the Greek central bank could offer to the country’s financial sector was blamed by many in Greece for forcing the closure of the banks, and putting strict ceilings on deposits.
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