[ATHENS] Greece's stock exchange suffered its steepest-ever fall on Monday, plunging more than 16 per cent as trading resumed after a five-week shutdown triggered by the country's debt crisis.
Bank shares were particularly hard-hit, sinking some 30 per cent after the Athens bourse opened for the first time since the government imposed capital controls to prevent a bank run and stave off financial collapse at the height of its standoff with EU-IMF creditors over a new bailout.
The ATHEX index ended the day a record 16.32 lower to 668.06 points, its worst drop in nearly 30 years, highlighting investors' ongoing anxiety about the Greek economy even after a new rescue deal was agreed last month.
The previous worst loss in the stock market's history was a 15.03-per cent tumble in 1987.
"The situation in Greek equity markets will have to get a lot worse before it gets better," said Luca Paolini, Pictet Asset Management's chief strategist in London.
The reopening of the stock market came after senior EU and IMF auditors held their first meetings with Greek ministers to finalise the new three-year bailout for the country that could be worth up to 86 billion euros (S$130 billion).
The negotiations are "going in the right direction," EU Economic Affairs Commissioner Pierre Moscovici told the Greek daily Ethnos.
"Our Greek partners are responding in a constructive and comprehensive manner, and are working hard," he said, after months of acrimony between the two sides.
The tough conditions demanded by creditors in return for the rescue funds have however put a major strain on Prime Minister Alexis Tsipras, whose Syriza party came to power on an anti-austerity platform.
The 41-year-old premier faced a mutiny among his lawmakers last month and he has warned that early elections will be called if his MPs refuse to ratify the bailout in parliament.
Analysts had widely expected Greece's vulnerable banks to bear the brunt of the mass sell-off when traders returned to their desks on Monday.
Uncertainty over the fate of Greece's economy, and its place in the eurozone, has seen bank customers withdraw some 40 billion euros since December, leaving lenders dangerously low on cash and in need of urgent recapitalisation.
Banks across Greece were ordered to stay shut when the government imposed its capital controls on June 26. They reopened on July 20, but withdrawals and money transfers abroad remain restricted.
The National Bank and Piraeus both fell to the maximum allowed level of minus 30 per cent in Monday's session. Alpha Bank finished at minus 29.81 per cent while Eurobank fell 29.86 per cent.
The four top banks are expected to undergo stress tests in the autumn to determine their recapitalisation requirements using European rescue funds.
Greek officials hope to complete the operation before new regulations come into effect in 2016, when bank shareholders and depositors will foot the lion's share of recapitalisation costs - a process known as "bail-in" - instead of European taxpayers.
Investors on Monday also offloaded shares in top companies such as gaming giant OPAP, electricity provider PPC, telecoms operator OTE and leading refiners HELPE, all shedding between 12 and 23 per cent.
"Pressure by sellers was high. It is logical and anticipated by everyone," stock market chairman Socrates Lazaridis told Bloomberg TV, adding that he expected the market to stabilise in a month's time.
The reopened stock market currently operates as normal for foreign investors but local traders still face restrictions and cannot buy securities with money from their bank accounts in Greece. They can, however, use foreign bank accounts or make cash transactions.
The Greek economy is forecast to contract by at least 3.0 per cent this year.
In the latest batch of worrying data out of the country, a survey by a small traders association on Monday found that 51.2 per cent of small and medium-sized companies had seen their sales drop by more than half since the capital controls were imposed.
The measures have forced many companies to send staff on mandatory vacation and disrupted the import of a wide array of goods, raising the prospect of shortages in the autumn, according to market insiders.
Read more on the Greek crisis here