Global X FTSE Greece 20 (NYSEArca: GREK) was the steepest decliner among unleveraged ETFs on Wednesday morning as the fund dropped 10% on renewed fears over the European debt crisis and the country’s precarious financial situation.
National Bank of Greece (NYSE: NBG) plunged more than 20%. The stock is the Greek ETF’s second-largest holding at 14.4% of the portfolio.
GREK had been enjoying a strong October before Wednesday’s sell-off with a nearly 70% three-month rally heading into the day’s trading.
However, lingering worries that Greece may default on its debt or exit the euro spooked investors Wednesday.
“Greece’s draft budget for 2013 has forecast a deeper recession and worse debt problems than previously thought,” BBC News reported Wednesday. “The economy is expected to shrink by 4.5% next year, and government debts to rise to 189% of economic output.”
Meanwhile, European governments are applying pressure on Greece to cut spending as a condition for more financial aid, Bloomberg News says.
Also, Commerzbank analysts think the risks of a Greek bankruptcy in mid-November are rising, FXstreet reports.
Global X FTSE Greece 20
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