Markets Disappointed by Lack of Specific Greek Budget Measures

Posted by in Economy

Markets reacted negatively to the lack of specific measures and details about the three-years budget policy plan and the Athens Stock Exchange recordeed losses. While Friday’s session at the ASE started with +1,4% it dropped to -0,40%  after Prime Minister George Papandreou concluded his speech. It is very interesting to read some reactions of finance analysts as quoted by Reuters:

The speech offered little to appease financial markets nervous over a possible debt restructuring.

Government officials had said the announcement would send a message to investors that Greece was determined to meet its targets. But Papandreou gave little initial detail on how he would achieve deficit cuts and selloffs, although more was expected from the finance ministry later in the day.

Greece had been expected to announce sell-offs, benefit cuts and effective tax hikes to save about 23 billion euros to bring its budget deficit to about 1 percent in 2015 from about 10 percent in 2010.

“There appears to be very little new in his statement. It is disappointing given previous speculation he was about to announce some significant changes,” said Chris Pryce, analyst at Fitch Ratings.

“The prime minister’s speech brought no clarity, uncertainty remains. What the market would have liked was a specific timetable for the part of privatisations that refer to 2011, this should have been spelled out,” said Theodore Krintas, head of wealth management at Attica Bank.

Spreads between Greek 10-year bonds and German bunds remained above 1,000 basis points and Greek stocks lost about 2.7 percent of their value on the lack of specific measures. (Read Full Story HERE)

Happy Easter and a Merry Old Year!