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Why is Greek Stock Market Afraid of Elections? by Capital.gr
Posted by keeptalkinggreece in Economy
I read this very interesting article with the title “Why is Greek Stock Market Afraid of the Elections”. As the article has been published on Greek Economic News Portal Capital,.gr, I took the time to translate is as best as possible.
“After Sunday’s local elections, the government needs to indicate whether the result was positive or not. That is, to make clear whether we are heading towards for early parliamentary elections or not. This clarification will decide for next week’s course of the Greek stock market.
However, all participants in the financial market proceedings in Greece and abroad have realized that the scenarios and information about early elections before completing the four years term ‘sank’ the Stock Exchange, rocketed the spreads and created political risks.
Most important, say many analysts, these scenarios seemed to have crashed down within 48 hours the positive psychology that was gradually “built” for a month and had been reinforced by the successful recapitalization of the National Bank. They brought back uncertainty, ambiguity and scaremongering.
As a result, while the Greek Stock Market was enjoying a period of calmness – until 25 October (Day when PM Papandreou spoke of early elections), it took a downward course for four consecutive meetings (26 to 10 – 1 / 11) and led the General Index to 1400 units levels from from 1640 units (-9.14 %).
As analysts explain, there were two main factors for the sharp price decline: First, the statements on the possibility of early elections, which in the language of the market means an increase in political risk. Secondly, the report by Minister of Finance G. Papakonstantinou that the revised deficit for 2009 is over 15% of GDP and that recession will continue in 2011, declining by 2.5% – 3%. ”
Source: www.capital.gr
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