Iceland Stock Market Drops 77% As Trading Resumes
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Here's what a real bear market looks like: Icelandic Stocks Drop 77% as Trading Resumes After 3-Day Halt
Iceland's benchmark stock index plunged 77 percent, the biggest decline on record, as trading resumed after a three-day suspension and the nationalization of the country's largest banks.Mike "Mish" Shedlock
Investors demanded a higher premium to hold Icelandic government bonds, while the price of the country's currency remained "undetermined," according to TD Securities.
The global financial crises sparked the collapse this month of Kaupthing Bank hf, Glitnir Bank hf and Landsbanki Islands hf with debts equivalent to as much as 12 times the size of Iceland's economy. The three banks accounted for about 76 percent of the OMX Iceland 15 Index's value prior to the nationalization.
"We are quite far away from having it up and running in terms of anybody being able to invest, or disinvest in the Icelandic stock market,'' said Lars Christensen, a senior strategist at Danske Bank A/S in Copenhagen. "Given that we don't have a normally functioning exchange-rate market, a fixed income market, we don't have a clearing system between the banks internally, it's hard to talk about any well-functioning stock market.''
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