Aug 31st 2015, More polls indicate that Greece’s elections will be a neck-and-neck race

Athens, August 31st 

·         seven polls were published during weekend indicating a narrow gap between leading political parties SYRIZA & New Democracy, which varies between 3.1% and 1%.

·         all polls show that Greece’s new parliament will include eight political parties. They also show that Kammenos, the leader of Independent Greeks and Tsipras’ ally, won’t succeed in entering Parliament.

·         polls also indicate that elections will end up to a hung parliament. It appears that the formation of coalition government is one way road due to numerous and complicated obligations agreed with the 3^rd MoU and worsening economic conditions.

·         a series of economic indicators published in July showed that local economic will return to negative territory in 2H15. However, there are signs that the degree of economic contraction could be less negative than initially expected. More specifically:  

o   the on-going China-centric crisis helps a reduction of price of oil, which will further assist both local and eurozone’s economic activity.

o   according to data published by the Bank of Greece, arrivals of tourists increased by 12.4% in July ’15 (on annual basis) vs. 13.7% in June. This occurred despite the implementation of capital controls and the uncertainties related to referendum which could have impacted touristic product during July.

o   furthermore, according to more recent data published by Confederation of Greek Tourism (SETE), the number of arrivals increased by 6.9% during Jan-Jul which is the result of an increase by 5.3% in July. In addition, the chairman of SETE stated during weekend that Autumn’s revenues from tourism will further increase and cross the level of 3.2 bios euros and the number of tourists will reach the level of 5.5 mios. Finally, he expects that number of tourists’ arrivals in 2015 will cross the level of 26 mios  which a historical record.

·         it seems that gradual restoration of confidence assists on the return of deposits to local Banks. Consequently, the Bank of Greece gradually takes positive steps towards relaxation of capital controls. More specifically,

o   the daily limit for bank’s business transactions abroad has been increased from 5 to 7 mios euros.

o   the monthly maximum overseas transfer limit for institutions has been set at 40 mios euros, while the threshold for similar transactions by individuals has been set at 500 euros.

Risk assessment: despite the fact, that Tsipras has refused to cooperate with other pro Europe political parties after elections, the formation of a coalition government between SYRIZA (left), New Democracy (centre right), Potami (centre) and PASOK (centre left) appears to be one-way road. My estimate is that there will be two possibilities: a) either we’ll have a coalition government without Tsipras as prime minister b) or the current caretaker government will continue to operate after elections. Actually, the caretaker government is the result of a compromise between SYRIZA and pro Europe opposition.

I do believe that the implementation of capital controls will continue for a long period of time as regards the transactions with cash. This is due to the significant increase of usage of banks’ debit cards for every day’s transactions. As a result, capital controls will gradually decrease the significantly bigger local black economy and this will help to the increase of state revenues.

Aug 29-30th 2015, Appointment of Greece’s caretaker government is a significant step towards return to normality

Athens, Aug 29-30th

·         Greece’s caretaker government led by top judge Thanou was sworn by President Pavlopoulos. A cabinet meeting took place at the Parliament. The new prime minister Thanou notified the Speaker of Commons Constantoupoulou as regards the proclamation of elections and the dissolution of Parliament.

·         As it was predicted, the profile of new cabinet  a) is pro European and b) it consists of individuals of more relevant or even better professional profile compared to previous SYRIZA – Independent Greeks’ government.

o    Two more polls were published showing a) the gap between SYRIZA and New Democracy (centre right) has been narrowed down significantly b) the new Parliament will consist of 8 political parties. It appears that Independent Greeks won’t succeed to surpass the threshold of 3% in order to enter the Parliament.

·         More specifically:

o    Metron analysis’ poll showed the following results: SYRIZA (left) 29%, New Democracy (centre right) 27.8%, Golden Dawn (neo nazis) 8.3%, Potami (centre) 6.7%, KKE (communists) 5.9%, PASOK (centre left) 5.4%, Centrist Union (centre) 4.9%, LAE (left eurosceptics former SYRIZA) 4.1%. In the same poll, 77% judge SYRIZA’s governance negatively.

o    University of Macedonia’s poll showed:  SYRIZA (left) 25%, New Democracy (centre right) 22%, Golden Dawn (neo nazis) 5.5%, Potami (centre) 6.0%, KKE (communists) 6.0%, PASOK (centre left) 4.5%, Centrist Union (centre) 4.5%, LAE (left eurosceptics former SYRIZA) 5.0%. The same poll was showing 18% gap between SYRIZA and ND, three month ago.

·         Unconfirmed reports mention that this weekend, during SYRIZA’s country-wide conference, there will be a significant number of resignations, mainly from its Youth Organisation. The number of SYRIZA’s middle and low level executives and activists who choose to exit the party and either go home or join political party LAE, intensifies.

·         Eurogroup's Jeroen Dijsselbloem mentioned in Reuters that the caretaker government should continue Greece's preparations to meet country's obligations to creditors.

·         Greece’s pensioners saw their pensions reduced due to the measures agreed by government SYRIZA-Independent Greeks and voted by Parliament. It is still unknown what will be the impact of it to Tsipras’s popularity.

·         Although Council of State decided against SYRIZA government’s decision to cease gold mining operations of ‘Hellas Gold’, company’s operations have not been restarted yet, because the decision has not been implemented yet. 2500 miners continue for a fifth day their demonstrations.

Risk assessment: Tsipras remains the main political figure in Greece’s political system so far. However, it seems that he came on power, a) sooner than he should have done b) without a clarification of his European strategy and c)  based on a populistic agenda. His u turn as regards negotiation with creditors increase probability that his popularity will go south.

SYRIZA was a grass root movement which grew during anti memorandum demonstrations and still has neither clear ideological characteristics nor clear hierarchy. Although Tsipras controls the majority of SYRIZA, he is heading to elections, weaker and without clear and/or strong communication strategy. It would be difficult to defend his u-turn amid significant deterioration of economy.

Greece new government’s first day, evolved smoothly and without any incident. In general, "suits and ties return to Greece’s leadership", and this created a very different picture compared to previous government’s appearance. 

Despite what is being said, this government will need to a) continue Greece’s preparations as regards obligations related to 3^rd MoU b) restore confidence to economy in order to handle banks’ recapitalisation and improve performance on tax revenues front and c) handle refugees’ crisis.

I remain on my previous estimate that this government will probably stay after elections because Greece is heading on a hung parliament and currently SYRIZA rejects any plan to form coalition government with New Democracy, Potami and PASOK. 

Needless to say that caretaker government is the result of a compromise between SYRIZA and all pro-European political parties (ND, Potami & PASOK). Let’s keep this in mind.

I see  a gradual reduction of overall Greece’s political risk; although there are significant risks ahead, Greece gradually returns to normality and this will ‘contaminate’ economy soon.

Aug 28th 2015, Greece is heading to snap on September 20th but chances are high for a hung parliament!

Athens, Aug 28th

Greece, political developments. Greece is heading to snap on September 20^th but chances are high for a hung parliament!

·         Tsipras left Greece’s prime minister’s office after 7 month service. Greece’s President of Democracy Pavlopoulos appointed the Head of Supreme Court Thanou as the caretaker prime minister to run elections. Thanou becomes the first woman to assume the post of prime minister in Greece’s contemporary history and this is a historic development.

·         There are unconfirmed reports regarding the new cabinet showing that a) it will be pro-European and b) it will consists of ministers of significantly higher professional and/or academic background, compared to the cabinet of previous government.

·         In addition, there are unconfirmed reports which mention that four more polls show that the forthcoming elections will be too close to call. All four are showing a narrow gap between SYRIZA (left) and New Democracy (centre right). In any case, it is highly likely that Greece will face a hung parliament. More specifically they show:

o    SYRIZA’s popularity has gone south but it still ahead of New Democracy which is second; gap has been narrowed significantly

o    4 political parties i.e. Potami (centre) , KKE (Communists), Golden Dawn (neo nazi) and LAE (new eurosceptic political - left) but at single digit % level 

·         Meimarakis of New Democracy (centre right) accused Tsipras that is planning to escape from his responsibilities associated with the implementation of the MoU he signed. These allegations are linked  to Tsipras first pre-election interview when he mentioned that after elections, he would not cooperate with none of the pro-European political parties such as New Democracy (centre right), Potami (centre) and PASOK (centre left).

Risk assessment: Despıte allegations from several polıtıcal partıes as regards a) short duration of elections’ campaign and b) the selectıon of top judge Thanou as caretaker prıme mınıster (two other top judges’ posts are vacant), her appointment could be well-received by local public opinion due to three reasons: a) she is the first woman to assume the post of prime minister b) she brings along a significantly better cabinet with pro-European profile and c) she comes with the end of a 7 month period of high political uncertainty which deteriorated local economy.  

Considering the polls so far, it is highly likely that the forthcoming elections will lead to a hung parliament. This means that unless there is an agreement between SYRIZA and New Democracy to form a coalition government, Thanou’s government will serve for a certain period of time after elections. In general, the appointment of Thanou’s government represents a reduction of the overall country risk considering that Thanou will pursue the agreement of Greece’s political leaders which led to the 3^rd MoU.   

Greece, economic developments.

·         Athens Stock Exchange index closed at 627.02 (+0.69%) but volume remains at extremely low levels 27.03 mios euros. This is due to a) capital controls don’t allow investments in Greek equities by using deposits of Greek Banks. This means that this volume represents either foreign funds or funds from liquidation of existing equities or new cash.

·         Greece 2 year bond yield at 12.019% which is -0.526 vs. previous close or -4.19%, 52 week range 9.915% - 57.713%

·         Greece 10 year bond yield at 9.307% which is +0.181 vs. previous close or +1.97%, 52 week range 5.530% – 19.443%

·         The Council of State has ruled in favour of the mining company Hellas Gold and against previous government’s position which practically closed down the Halkidiki’s gold mines and made redundant 2500 miners. The decision suggests that the Ministry of Energy didn’t have a valid reason for blocking the project. It is still unknown what will be the new government’s stance on this matter.

·         The Association of Greek Industrialists issued a statement in which it stresses out the need that the government which will be formed after elections, will fully back the bailout program 

·         According to the Confederation of Greek Tourism, Greece will have another record year in tourism with total number of arrivals crossing the level of 26 mios and total revenues the level of 14.5 bios euros.   

Risk assessment: Local old fashioned political system is going through a tough restructuring which impacts economy. The appointment of Thanou government represents a positive development considering that is the result of a compromise of pro-European political parties and SYRIZA (after MoU).

Despite the derailment of state budget (especially on revenues front) and the significant deterioration of economic sentiment (at 80 from over 100 in 2014) and PMI (at 30 which is historic low), Greece’s economic outlook could return to growth trajectory. This will be assisted by a) the significant drop of price of oil compared to last year, b) the depreciation of eur vs usd compared to last year and c) the return of Eurozone’s economy to growth trajectory.

But it is of extremely high importance to mention that except public sector, the public administration and local political system, the private sector of economy needs to go through significant structural reforms focussing on a) competitiveness enhancement and b) internationalization of its strategy

Aug 27th 2015, Greece faces bottleneck in the selection of caretaker prime minister, amid deterioration of economy

Athens, Aug 27th

 

Greece, political developments. Greece is heading to snap elections amid disagreements as regards who will be the caretaker prime minister

• Greece’s prime minister Tsipras, confirmed during his first pre-election interview that he won’t be prime minister of a coalition government which will include other pro-European political parties i.e. New Democracy (centre right), PASOK (centre left) and Potami (centre).
• he also reconfirmed his willingness to form a coalition government of   SYRIZA (left) and Independent Greeks (nationalists).
• however, two polls published this week show that

a) SYRIZA’s rupture reduce the chances that SYRIZA will get the majority of MPs after the forthcoming elections

b) we may see the unthinkable until couple of weeks ago i.e. SYRIZA won’t be the first political party in terms of number of votes (this is a prerequisite in order to get 50 additional MPs which are given to the first political party which comes first in terms of votes)

c) it is highly likely that Independent Greeks won’t surpass the 3% threshold and won’t participate in the next parliament.

• according to Greece’s Constitution, today is the last day of exploratory mandates. The leader of the newly formed Eurosceptic party LAE, Lafazanis currently holds the exploratory mandate but has no chances to form government.  
• according to Greece’s Constitution unless there is an agreement by the leaders of political parties, the President of Greek Democracy, Pavlopoulos has to choose as caretaker prime minister, one of the Heads of the three Supreme Courts.

However, it seems that there is a disagreement as regards the selection of Thanou as caretaker prime minister. Thanou is currently the Head of one of the three Supreme Courts but the other two positions of Heads of Supreme Courts are still vacant.

As a result, Mr Athanassiou the former Minister of Justice of New Democracy’s government raised compliance issues related to Thanou's candidacy because: a) her appointment to the post of Head of Greece's Supreme Court occurred couple weeks ago b) she was selected by the government for the post of the Head of the Supreme Court while there were more senior judges than her c) Tsipras Government didn’t select Heads for the other two Supreme Courts.

So far, there is no backing of Athanassiou’s allegations by his party (New Democracy) but the issue remains.

Risk assessment: Greece’s political system is going through a tough and complicated restructuring of its political system. The caretaker government will organise snap elections amid a) budget derailment, b) significant deadlines as regards 3rd memorandum (i.e. recapitalisation of Greek Banks) and c) Syrian refugee crisis (fluid geopolitical environment).

In addition, polls are showing that no political party will win majority. This means that the formation of coalition government won’t be an easy task and that it is highly probable that the caretaker government will govern the country for a certain period of time after elections. For this reason, it is not certain that Thanou will be selected as caretaker prime minister.

Greece, economic developments.

• According to the Ministry of Finance, Greece’s Jan-Jul budget ended up with a primary surplus of 3.7 bios euros.
• However, state revenues closed at 26.9 bios which are lower by 3.9 bios euros or -12.8% than expected. Tax revenues were lower across the board i.e. direct taxes were lower by -2.6 bios (-21.4%), from VAT revenues were lower by 0.5 bios (-7.2%), 0.5 bios less from real estate tax, 1.7 bios less revenues from ANFAs & SMPs, 0.9 bios less from indirect taxes (including VAT) etc. In general, tax revenues were lower by 3.4 bios euros which is -13.5% vs. target.
• Expenses excluding interest paid, closed at 23.2 bios which are 4.3 bios euros lower than expected, The reduction of expenses is the reason of primary surplus. However, state obligations to creditors have reached the level of 5.3 bios (it was 3 bios in Jan’15)
• Bank deposits increased to 130 bios (it was 127 bios before the agreement of July 13th but was at 160 bios in the end of 2014). NPLs have reach the level of 100 bios euros (it was around 80 bios in 2014 and before SYRIZA came on power), the situation deteriorated since the inception of capital controls. Both create a negative environment for the recapitalisation of Greek Banks
• The Foundation for Economic and Industrial Research announced the Index of economic sentiment dropped to 81.3 in July which the lowest since October 2012. PMI which shows expectations as regards economic activity for the coming months, dropped to 30.2 in July which a historical low (it was 46.9 in June 2015)

Risk assessment: Greece needs a strong government in order to drive both country and economy out of the current political and economic mess. In addition, the new government has to restore confidence in economy before the successful completion Greek Bank's recapitalisation.

The local Tax Office has collected 26.9 bios euros during the 7 month period and needs about 28.7 bios in 5 month in order to meet its fiscal targets. The new government will need a supplementary budget in order to meet its obligations with creditors.

In general, Greece is facing a budget derailment due to the following reasons:

1. the SYRIZA-led government focussed on negotiations with creditors but ignored economy. The reduction of liquidity and cease of payment of state obligations to vendors, due to political uncertainty, impacted negatively the income of regular economy and loyal taxpayers as well.
2. both SYRIZA and Independent Greeks came on power based on a populistic agenda which included themes such as  ’I don’t pay taxes’ and ‘I don’t pay Banks’.
3. when the SYRIZA-led government was negotiating with creditors in public, he was using populistic arguments such as haircut of nominal value of debt and/or ‘Greek debt is a bubble, Greece won’t pay’. Simultaneously it was passing the message to individuals and companies either to tax evade or to avoid payment of their obligations either to state and/or banks.

Even if Tsipras win elections, it would be very difficult to govern and meet all commitments of the 3rd memorandum. During his first pre-election interview, he sent various ambiguous messages which don’t show a strategy to win. For instance he tied to combine the anti-memorandum with reforms agenda.

This communication strategy combined with the extended SYRIZA's internal crisis, increase probability that Tsipras will see his popularity going south and either will support a coalition government (without participating) or will escape.

Aug 26th 2015, Greece’s fluid political landscape impacts economy

Athens, Aug 26th

Greece, political developments. Greece is heading to snap elections; political landscape may change dramatically up to elections; SYRIZA’s popularity may take a nosedive.  

·         chances as regards elections date are now in favour of September 20^th; SYRIZA’s leadership insists of a fast track elections campaign; New Democracy (centre right), Potami (centre), PASOK (centre left), LAE (eurosceptic left) are in favour of September 27^th as regards elections date.

in addition, President of Democracy P. Pavlopoulos may not call a meeting of party leaders on Thursday before appointing a caretaker prime minister. This is due to objections raised by Tsipras and coalition partner P.Kammenos.

·         a new poll published yesterday by the market research company ‘Interview’; it shows SYRIZA’s popularity nose diving to 24% (from 37%) while New Democracy (centre right) following at 22%. This is the second poll showing a narrow gap between SYRIZA and New Democracy.

the political turmoil within SYRIZA continues; both ministers of Shipping Policy (Dritsas) and Migration Policy (Christodoulopoulou) announced that they won’t participate in the forthcoming elections. Additionally, unconfirmed reports indicate that the Finance minister (Tsakalotos) and previous government’s spokesman (Sakelaridis) who are both members of party faction named ‘movement of 53’ won’t participate as well.

the rupture within SYRIZA is more severe at grass-roots level where numerous activists and middle level executives submit their resignations and either will abstain from elections or join the newly formed Eurosceptic party LAE.

probabilities are higher that SYRIZA’s popularity will nosedive down to the region of 20-30% rather maintaining the 30-40% which was before the agreement of July 13^th.

·         the Speaker of Parliament Ms Constantopoulou continues to convene Parliament without the approval of political parties except the newly formed Eurosceptic party named LAE. For the first time in Greece’s parliamentary history, there was a parliamentary meeting of 16 MPs only. She also called the Governor of Bank of Greece Mr Stournaras to appear before Parliament’s Institutions Committee, without the approval of the majority of the Committee. Mr Stournaras rejected this call. Ms Constantopoulou renewed a call to the Governor of Bank of Greece to appear before the Committee today.

·         the Greek Supreme Court prosecutor, Mr Dragatsis called on the Greek Parliament to lift the SYRIZA’s MP and Deputy Speaker Mr Mitropoulos’s immunity from prosecution to a case involving a fee (1 mios euros) allegedly paid to Mitropoulos in 1999 which he subsequently failed to declare.

Risk assessment: We have a fluid political landscape. SYRIZA is mainly a grass-roots movement which gained power based on a populistic agenda. Tsipras gradually gained popularity which surpassed traditional left-wing voters and still remains the main party political figure in local political system.

However, SYRIZA’s pre-election strategy is still unknown and the number of middle and low level activists’ departures increases. For this reason, it is too soon to judge the impact of u-turn strategy and SYRIZA’s rupture to the overall popularity of SYRIZA because:

·         a significant number of voters is still on holidays

·         polls still don’t show credible results due to summer holidays

·         tax bills and reductions in pensions will occur later in September; real estate tax will be delivered to citizens, most probably after elections

Greece, economic developments.

·         the Athens Stock Exchange Index jumped by 9.38% to 621.7 points and almost wiped out Mondays losses due to China centric crisis. All four systemic banks’ prices increased between 25.42% and 29.17%. For another day, volume was kept at very low lever (36.33 mios euros). It becomes obvious that a) political uncertainty due to snap elections has increased volatility and b) capital controls has further reduced local bourse’s liquidity.

·         Greece’s 2 year bond yield remained unchanged at the level of 13.47%

·         Greece’s 10 year bond yield increased by 1.19% to the level of 9.745% … yields of Greek bonds remained more or less unchanged during Black Monday.

·         according to the Greek Association of Tourism Enterprises (SETE), tourists’ arrivals up increased by 6.9% during the 7 month period. Athens is leading as regards arrivals, with an increase of 26.5% while Santorini (17.1%), Mykonos (10.5%), Skiathos (14.3%) showing two-digit increase.

·         a protest against the government’s decision to cease the operations of mining company named ‘Hellas Gold ‘in Halkidiki continues for a second day. The number of miners who remain in the tunnels of a goldmine increased to 150 (from 30 the first day).

·         capital controls and political uncertainty caused a slight reduction of the numbers of containers passed through the Port of Piraeus, for a second month in a row. More specifically, 280,600 containers passed through the Port of Piraeus in July (285,600 in July ’14) and 252,700 containers passed through in June (260,300 in June ’14). Overall, there is still an increase in terms of the number of containers during the 7-month period (1,762 mios during Jan-Jul ’15 vs. 1,756 mios in’14)

·         the Greek Banks prepare for stress tests and remain cautiously optimistic as regards the capital requirements which will reveal after the completion of the impeding stress test. The assumptions of the baseline scenario predict a recession of -2.3% in 2015, followed by a recession of -1.3% in 2016 and growth of 2.7% in 2017. Stress tests scenarios were provided by the European Central Banks last week. The Greek Banks will need to deliver the first assessment to ECB by Thursday.

Risk assessment: Although Greece’s country risk has been reduced significantly since the agreement with creditors of July 13^th and its subsequent ratification by the Greek Parliament, local political landscape remains fluid and political uncertainty remains at higher levels compared to the rest of Eurozone. The local, old-fashioned political system is going through a tough restructuring but time is running out for economy and employment. Despite the fact that tourism will achieve another record year, investments in other parts of economy have been ceased, and capital controls impact severely mainly the small and medium size enterprises which represent the majority of local economy.

However, Greece maintains significant competitive advantages compared to other countries in this region and its geopolitical role has been enhanced due to the chaos which continues and intensifies in Middle East and Turkey region. In addition, Greece’s comparatively higher interest rates compared to other countries of eurozone, make investments in Greek assets very appealing to foreign investors. However, investors maintain a wait-and-see stance. The local economy needs a strong government which will acquire the ownership of the 3 year program of structural reforms and will lead the country back to normality.

Aug 25th 2015, Greece's pre election period is about to start

Athens, August 25th

Greece, political developments. Greece is heading to snap elections; most probable elections’ date appears to be September 27^th.

• The current Prime Minister Mr Tsipras is facing two threats which could end up losing party’s leading position: a) disappointment of his electoral base due to his recent u-turn in negotiations with creditors will increase abstention and this will impact mainly the leading party and b) the new Eurosceptic party (LAE) which was formed by the MPs and activists who left SYRIZA, could gain critical support vis-à-vis the centre right party of New Democracy.
• A new poll published by the German newspaper Bild, showed a reduction of gap between SYRIZA 28% (left) and New Democracy 25% (centre right). It also shows that LAE, the new eurosceptic Radical Left gains 8%. The number of current SYRIZA’s MPs, which either leave the party to LAE or announce that won’t participate in these elections, surpassed the number of 30 (out of 149)
• In addition, the Secretary of Central Committee Mr Koronakis stepped down, raising objections as regards the party policy during negotiations with creditors. However, it is not clear if his resignation is related to party’s policy issues or to a scandal concerning his systematic avoidance to join for compulsory military service.
• In general, it is too early to judge at this stage, the impact of SYRIZA’s rupture as regards the forthcoming elections. Additionally, it is very difficult to perform any market research during August due to holiday’s period. However, it is important to mention that among the MPs who left SYRIZA are 16 of the most popular MPs of SYRIZA. These MPs came first in terms of votes in their counties, among all candidates of all political parties, during the last elections of Jan’15.
• Last but not least, it is a matter of great importance to mention that although the Eurosceptic radical left part of SYRIZA doesn’t represent the majority of the party, it seems that it represents its most active part at grass-roots level and this will impact the overall SYRIZA’s performance in the forthcoming elections.
• The president of New Democracy (centre right) Mr Meimarakis attempted to form government   but failed to do so. The president of Democracy Mr Pavlopoulos gave the mandate to form government to the leader of the newly formed eurosceptic radical left party LAE, Mr Lafazanis. Mr Tsipras has rejected requests coming from both Meimarakis and Lafazanis as regards the formation of a new government.
• The name of the new Eurosceptic party is the abbreviation of LAiki Enotita which means Popular Unity (as it was the name of Chilean Leftish party of Salvador Allede, Unidad Popular 1970-73).
• After the recent government’s decision to close down the mines of the company “Hellas Gold” due to unclear reasons which are related to the internal party issues, the company made redundant about 2500 empolyees. Aa a result, over 30 miners are closed in a gold mine, protesting against government’s decision.
• According to local police, 78 protesters were during a demonstration against the investment of «Hellas Gold». It is important to mention that 68 out of 78 arrested, were foreigners (41 Germans) who participated in a international summer camp of radical left parties which protested against this investment.  

Greece, economic developments. The Athens Stock exchange Index experienced one of its worst days during the last few years.

• It plunged by 10.54% amid concerns about the Greece’s snap elections and global market volatility resulted by China’s crisis. All four systemic banks stock prices dropped by more than 20%. However, liquidity was kept at extremely low levels (39 mios euros)
• The 2 year bond yield increased by only 0.71% and was trading much lower than the levels before agreement with creditors (above 20% and up to 58%). The 10 year bond yield increased by only 0.28% and was trading much lower than the levels before agreement with creditors (above 12% and up to 20%). Both yields fluctuation showed a reduction of country risk due to the recent agreement with creditors and its approval by 222 MPs (out of 300).
• Greek tourism is on course for a new record in 2015 thanks to increased visitor numbers from the US, Germany, Britain, Balkans and Turkey. According to figures from the Bank of Greece, for the first six month of the year, foreign tourist arrivals increased by 20.8% to 7.56 million year-on-year. The Greek Association of Tourism Enterprises (SETE) estimates that as long as the election process results to a stable government, arrivals of foreign visitors will exceed a ttal of 25 million this year.
• An action plan to attract tourists to Greece all year round has been named ‘Dodeka’ after the Greek word for 12, and has been drawn up by the Hellenic Association of Travel& Tourist Agencies (HATTA). It includes the creation of a route related to the 12 Gods of Olympus and the creation of ancient Olympic sports
• Approvals for banking transactions gather pace. According to official data, around 60% of businesses’ requests to send money abroad are being approved by the Baking Transactions Approval Committee and local banks. Bank Deposits slightly increased in August (123 bios euros) compared to July (122 bios euros).
• The restoration of trust as a result of a) the formation of pro Europe government after elections, b) the successful recapitalisation of Greek Banks and c) the agreement of Greek debt restructuring will be the key factors for a return to normality as regards Greek Banking industry.

Aug 24th 2015, major sell-off of equities across the globe

Athens, August 24th,

Global markets: This week started with a major sell-off of equities across Far East.

• Although this crisis is China centric (-8,48% Sanghai), it impacted all neighbouring economies and gradually equity markets across the globe.
• The main reason behind today’s sell-off is the soft fundamentals of Chinese economy. Nevertheless, this crisis doesn’t only impact China’s local demand/economy but due to the size of No 2 global economy, it causes the plunge of commodity prices at global level. The most important development is the reduction of price of oil (WTI) at levels below $40 per barrel and Brent at around  $45 per barrel.
• For instance, significant economies such as Brazil, Russia and South Africa which are major exporters of commodities have been impacted significantly from this crisis. In additiona, the depreciation of chinese currency will impact economies which compete with China as regards exports.
• The Asian markets’ turmoil, also impacted european equities which had their worst day since 2008 i.e Stoxx Europe 600 fell by 5.3%, earlier losing as much as 8.1%.
• The crisis crossed Atlantic and Dow plunged as much as 1,000 points at the open on Monday but gradually started to recover. US Dollar plunged at a 7 month low vs. european currency; it was initially traded above 1.17 before dropping below 1.16. Although market selloff has nothing to do with US economy, there are significant concerns as regards a delay of the decision of FED to raise interest rates.
• On the other hand, the recent strengthening of euro is based on three main reasons: a) euro is the no 2 reserve currency globally and acts as a safe heaven b) recent structural reforms across eurozone have enhanced european economy’s competitiveness and c) market developments increase the probability of a delay as regards FED’s decision of US interest rates. As a result, this will bring the eur/usd exchange rate to higher evaluation levels.