Tuesday, November 1, 2011

Today's Major Market Move: Greek Stock Market Down Over 8% in Tuesday's Session

Earlier today Greece's prime minister George Papandreou took it upon himself to announce that the latest bailout terms were going to be put to a referendum to the people of Greece. This created quite a shock to financial markets around the world as no one was aware of this proposal until it was announced. It even came as a surprise to the EU officials and heads of state that had been intimately involved in negotiating the bailout terms. There were large declines in many equity markets, particularly in the Euro region: Italy -7.2%, Belgium -5.5%, France -5.4%, Germany -5%. The largest declines where in (obviously) Greece and its siamese sibling, Cyprus, down 8.1% and 8.6% respectively. Here were the top equity moves from today's session:

Click here to go to the live table.

Today's 8.6% drop in Cyprus comes on the heels of a 7.6% decline which was highlighted in yesterday's major market move post. The Greek equity market is on the verge of joining Cyprus as being one of the few equity markets, post the latest bailout, to be trading at their lows of 2011 (the last bailout was announced on Oct 27).

Click here to go to the live chart.

As was announced on zerohedge earlier today, the theoretical interest rate on 1 year Greek bonds rose to over 200% for the first time. The real interest rate is actually quite a bit lower, less than 100%, because of the planned 50% haircut. Furthermore the coupon is much lower than that (I think in 7-10% range) so much of the principal remains at at risk until maturity of another haircut.

Link to chart on bloomberg.com

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