2014 does not appear to be going smoothly for the Euro zone overall. If deflationary worries and a pause in growth in some big nations were not enough to trouble investors, recent worries over the reliability of one of Portugal's banks prompted a broader market selloff.
While both U.S. and European stock markets were punished following the news on July 10, the penalty was reasonably harsher for the nation in question – Portugal.
What Happened in Portugal?
As per Reuters, Espirito Santo International, the largest shareholder in Banco Espirito Santo – one of the biggest banks in Portugal – stalled its shares and bonds trading because of material difficulties at its parent company Espirito Santo International (NYSE: ESI).
Espirito Santo International allegedly defaulted on a debt payment this week and was accused of accounting discrepancies. This piece of information was enough to unnerve investors who have just seen the Euro zone emerging out of a two-and-half year long recession last year (read: Play the PIIGS Recovery with These European ETFs).
As a result, Banco Espirito Santo AS saw its shares plunge 17.2% on July 10 while Espirito Santo Financial Group SA and Portugal's benchmark stock index plummeted 8.92% and 4.2%, respectively.
The Portuguese index experienced the worst slump since last July. Among other pillars of PIGS nations (Portugal, Italy, Greece and Spain), the Italian ...
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