As the discussions get closer and closer to the Sunday deadline, equity investors in Greece and Cyprus are exhibiting more nervousness. In Friday's trading session they were the #1 and #2 worst performing equity markets with 7.2% and 5.9% declines respectively. They were well ahead of the third worst performer, the Philippines, which came in at down 1.3%. Here's the list of the bottom 10 performing benchmark equity indexes from Friday:
The equity markets from both countries had a nice little rebound into the new year as there was the expectation that both sides would be motivated to get a deal done quickly. However both markets are now moving in a downward direction indicating that some investors are bracing for the eventuality that the deadline will be missed. We commonly discuss both countries in tandem since their economies are very closely intertwined and this is particularly evident when comparing the performance of the two benchmark equity indexes (FTSE/ASE 20 Index for Greece and General Market Index CSE for Cyprus).
Every status update seems to have the a similar message, something akin to "Good progress has been made but many tough decisions remain.".
We present the latest status update courtesy of Reuters as a case in point:
Greece is still struggling to overcome "crucial" issues before it can secure a 130-billion-euro ($171 billion)bailout package needed to avert a messy bankruptcy, the country's finance minister said. After marathon negotiations on Friday to agree tough labor reforms that would appease both wary political leaders and irate lenders faced with a rising bill to save the country from bankruptcy, Athens said more work was needed to seal a deal. "After 12 hours of tough negotiations, we have solved many issues but other crucial issues are still open," Finance Minister Evangelos Venizelos told reporters.
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