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Greek bonds and US-listed equities slump as debt crisis worsens
[LONDON] Investors dumped Greek bonds and US-listed Greek equity assets on Monday after Greece closed its banks and imposed capital controls over the weekend.
The Athens stock market was closed through to July 6 as part of broader capital controls, but trading in bonds and in US markets reflected investors' alarm.
Greek bond yields rose sharply, according to financial platform Tradeweb, although strategists cautioned that capital controls would probably restrict trading by the domestic banks which hold most of the nation's debt.
The Global X FTSE Greece exchange-traded fund (ETF) fell 15 per cent, while National Bank of Greece's American Depositary Receipts (ADRs) slumped by around 22 per cent.
ETFs reflect a basket of underlying assets and are tradeable on international stock markets. ADRs are also typically used by US investors as a means of trading securities in a foreign company in dollars.
The 'GREK' ETF has fallen by nearly 30 per cent since the start of 2015, pricing in deepening concerns over the Greek economy. 'Short interest' bets that the ETF will fall in future have also risen over the last month.
After receiving no increase in emergency funding for Greek lenders from the European Central Bank, Prime Minister Alexis Tsipras announced capital controls in a televised address on Sunday night to prevent banks from collapsing under the weight of mass withdrawals.
Greece has less than 48 hours to pay back 1.6 billion euros of International Monetary Fund loans, and a default would set in train events that could lead to an exit from the euro currency bloc.
Index provider MSCI added on Monday that the closure of the Athens stock market and the imposition of capital controls could lead to Greece's relegation from the benchmark emerging equity index and its reclassification as a "standalone" market.