For more than five weeks, the Athens' stock market has stood idle while the Greek authorities have negotiated with the IMF and its European creditors. In a bid to provide short-term relief to the financial crisis and prevents the county's banks from collapsing, Greece has virtually ground to an economic standstill.
Today marks the end of this hiatus, however, with the markets having reopened this morning amid widespread speculation and fervor. Traders are predicting a tumultuous day of incredible volatility, aided by poor sentiment, a strong urge to sell and a considerable decline in Asian stocks.
Open for business: Why Greece will struggle to embrace normality
Having paved the way for further negotiations surrounding an 86 billion (£61 billion) Euro bailout package with creditors, Greece is finally taking some tentative steps towards economic normality. The resumption of stock market trading is simply the next step in this process, although it is unlikely to provide considerable relief in the short-term. After all, the more stringent terms and aggressive austerity measures that will be included in the new agreement has had a considerable impact on business confidence, with the lack of a final resolution also creating genuine uncertainty.
The first hours of trading have hardly helped, with the index already down by 22.8% in early trading and the National Bank of Greece having declined 30% in the opening minutes. This highlights the particular vulnerability associated with banks in Greece at present, and the initial activity has encouraged the capital markets committee and watchdog organisation to implement an indefinite ban on short selling. This will do little to improve the mood of traders, however, and could potentially force the market to grind to a halt.
The lack of global economic growth is also placing a strain on the Greek recovery, as while business insolvencies may be down in the UK the influential Asia-pacific is struggling. Asian stocks continued to fall overnight amid concerns over stagnant economic growth in China, which in turn has triggered a sell-off of commodities and shares nationwide. The decline of major Asian indexes such as Japan's Nikkei (0.5%) and Hong Kong (1.0%) has also fuelled talk of global economic decline and slowdown, generating even more negative sentiment and a desire to seek out more profitable markets among traders.
Our Final Thoughts
With little chance of the Greek stock market rebounding either today or in the near future (and the impact of global economic instability also taking its toll), traders appear increasingly keen to seek out more viable investment opportunities. This is especially true given the restrictions based on short-selling in the Greek marketplace, while the inability to generate long-term gains is extremely unappealing on a volatile and increasingly diversifying market.
After all, there are new market opportunities developing all of the time, as sectors such as the mobile app industry continue to evolve. The sharp ascent of freemium apps such as Glu Mobile underlines the growth and potential that exists in some markets, for example, as they evolve exponentially and disproportionately to the rest of the economy.
The issue for Greece and its troubled stock market is that its fate is constantly undermined by short-term thinking, meaning that without a vibrant and growing global economy it has little chance of succeeding.