Greek government reverses austerity policies, stocks hit

Greece’s new hard-left Prime Minister Alexis Tsipras sent the Athens stock market diving on Wednesday after his government scrapped key privatisation projects. In sweeping announcements two days after taking power, Tsipras began reversing many of the unpopular measures that underpin Greece’s 240-billion-euro ($269 billion) bailout programme, specifically putting on hold the previous administration’s plans to sell a majority stake in the ports of Piraeus and Thessaloniki. The announcements sent stocks on the Athens exchange tumbling, with the main index losing over 9.0 percent and the main banks tumbling by a quarter. European markets though appeared to shrug off the problems in Greece and remained largely unaffected.

The first comments by the new government have prompted investors to think twice about whether they want to have their money in Greece right now.

Nick Malkoutzis, head analyst at MacroPolis, an Athens-based market and political review

Tsipras, whose Syriza party swept to power on Sunday pledging to end painful austerity after six years of recession, told his first cabinet meeting that Greece was no longer willing to bow to the “politics of submission”, in a clear swipe at creditors the EU and the International Monetary Fund. Syriza has made frequent references to a “New Deal”, harking back to the stimulus programme that pulled the United States out of the Great Depression in the 1930s.

That would have fatal consequences for Greece’s financial system. Greek banks would then lose their access to central bank money.

Bundesbank board member Joachim Nagel

Tsipras Business