Greek Drama Draws Market Scrutiny as ECB Impact Weighed
– Bloomberg News
Greek politics are becoming a concern for financial markets again.
Intraday volatility on the Greek ASE Index (ASE) and the broader Stoxx Europe 600 Index surged to double their annual average last week after Prime Minster Antonis Samaras failed to win two-thirds support in parliament for his candidate to succeed President Karolos Papoulias. Today, he failed again in a second of three potential ballots. Greece?s benchmark stock gauge dropped 1.8 percent at 12:42 p.m. in Athens today.
Anxiety that voters will kick out leaders committed to Greece?s bailout wreaked havoc on equities earlier this month, sending the ASE down 20 percent for its biggest weekly slump since 1987. The losses followed Samaras?s decision to seek parliamentary support for candidate Stavros Dimas, a procedure that may end up spurring national elections. Losing could empower Syriza, the opposition party that seeks a writedown on Greek debt held by the European Central Bank and others.
The renegotiation sought by Syriza ?has considerable risk of a Greek exit: a real test case for the EU and Mario Draghi?s ?whatever it takes,?? said Manish Singh, head of investments at Crossbridge Capital, which oversees about $2 billion.
The ASE Index, up as much as 18 percent in March as optimism built over Europe?s economy, is now down 25 percent for 2014, making it the third-worst performing market in the world behind Russia and Portugal. While the Stoxx 600 is in the midst of its biggest rally in two months, concern is rising that Greek politics could jeopardize European stimulus actions such as the purchase of government bonds by the ECB.
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