ETFs that invest in Greece and other European countries fell at the open Monday as Cyprus was poised to force savers to chip in to help pay for a financial bailout.
Global X FTSE Greece 20 ETF (NYSEArca: GREK) was set for further declines after recently falling about 15% from its 52-week high.
Meanwhile, iShares MSCI Italy (NYSEArca: EWI) and iShares MSCI Spain (NYSEArca: EWP) both slipped about 3% before Monday’s opening bell in the U.S.
Cyprus joins Greece, Ireland, Portugal and Spain to ask the Eurozone for a bailout. However, Cyprus is the first country to introduce a levy on bank deposits as a condition for financial aid. [Euro ETF Tumbles on Cyprus Levy]
“Should depositors in Cyprus or other peripheral countries feel safe now? They may not. After all, deposit-guarantee schemes do not guarantee against a levy. Depositors may also have to factor in that the one-off levy could inspire national governments to do the same thing. So the risk of bank runs has just gone up,” analysts at Danske Bank said in a Greek Reporter story.