Is Reopening Greek Banks Actually Bad News?
If you have been watching the global financial news during any point of the past month, chances are high that the coverage of Greece may have become more than just overwhelming. This nation has systemic problems that go very deep, and its fate inside the European Union and inside of the euro currency remains up for debate. That being said, shouldn’t most market watchers assume that news of the Greek banks being set to reopen on Monday be interpreted as good news?
Greek banks reportedly will finally reopen on Monday, July 20, 2015. With Greece’s economy frozen down to 60 euros per day, with international businesses either unable to get products to Greece or refusing to send them, this seems like good news.
National Bank of Greece S.A. (NYSE: NBG) is one of the official trading proxies used by investors to judge the daily news flow out of Greece. If American depositary shares are up, things are viewed positively, and if the ADSs are down, then things are viewed negatively. But that now seems to be a matter up for debate, with Greece’s economy effectively shut down and with investors unsure how to price shares.
Having bank holidays that last more than a few days is far from normal economic behavior. A couple or few weeks is just a national embarrassment. Is it possible that the closure prevented a final run on the banks? Are there fears that once banks reopen that a run on the remaining banks becomes more likely?
National Bank of Greece ADSs were last seen down 4% at $1.12 on more than 22 million shares in New York trading, with less than an hour until Thursday’s close. Its 52-week range is $0.85 to $3.69. Again, reopening the banks might have seemed like better news than this. Unfortunately investors and the public may just have not figured out how to price anything in Greece.