ATHENS: Greece’s battered banking stocks staged a strong rebound Thursday, bouncing back after a three-day rout that wiped 63 percent from their market value.
The rebound helped the broader Athens market to recover, but non-financial stocks underperformed.
The banking index end 17.8 percent higher with all of its constituent stocks closing with gains, led by a 27.4 percent jump in National Bank, Greece’s largest lender.
The banking index had dropped 3.6 percent early in the session. Alpha Bank reversed a 26 percent early loss to close 11.6 percent higher.
“There was a lot of selling steam let out in the previous sessions, we may be in for some more upside tomorrow but trading will stay choppy. We saw a technical reaction to oversold levels today,” investment adviser Theodore Mouratidis said.
The broader market – of which banking stocks make up around 20 percent – ended up 3.6 percent. Only three of the 25 stocks in the blue-chip index closed with losses, including engineering contractor Metka and jewelry retailer Folli Follie.
“If the move up is confirmed tomorrow as well, we may be in for a better course,” said Takis Zamanis, chief trader at Beta Securities. “About 58 percent of today’s volume was done by bank shares.”
Telecoms provider OTE closed 9.3 percent higher despite posting a second-quarter loss due to a voluntary redundancy scheme and a weak performance by its foreign operations.
Greece’s banks need to be recapitalized after a flight of euros from deposits for most of this year and mounting bad loans.
But that will hurt existing shareholders, when it comes, by diluting the value of their holdings.
Athens and its international lenders share the view that banks must complete their recapitalization by the end of this year and avoid a haircut on large depositors, Greece’s finance minister said Wednesday.
The European Union estimates the recapitalization may cost between 10 billion euros ($11 billion) and 25 billion euros.
“The key determinant for bank values remains the outcome of the coming comprehensive assessment by regulators,” analyst Nick Koskoletos at Athens-based Eurobank Equities said.