Writes:
Investors began giving up on Greek stocks even before the latest rout.
A U.S. exchange-traded fund tracking the nation?s equities has had a record streak of redemptions, losing money for four straight months. The wagers proved well-timed: the benchmark ASE Index plunged the most since 1987 yesterday after Prime Minister Antonis Samaras opened the door for the ascent of an anti-austerity party in Greek politics. It dropped another 1.1 percent to 893.13 at 12:29 p.m. in Athens.
With Greece?s benchmark stock index about three times more volatile than the Stoxx Europe 600 Index, investors are bracing for more declines. The risk now is that Samaras may have to call a parliamentary election that Syriza, a party that doesn?t favor austerity, might win, reintroducing the turmoil that threatened the European currency union in 2012.
?The problem is that the government has a very slim majority and if it collapses, then the economy will collapse with it,? Thanassis Drogossis, the head of equities at Athens-based Pantelakis Securities SA, said in a phone interview. ?It?s hard to tell investors to catch a falling knife. Prudence has to be the call here.?
Greek stocks tumbled this year as bank defaults in Portugal and a weaker euro-area economic recovery strained confidence in Europe?s peripheral markets. As Greece seeks to follow Ireland, Portugal and Spain out of a bailout program, the rise of Syriza is raising concern over the nation?s recovery. The Stoxx 600 fell the most in almost two months yesterday.
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