Asia Pacific share market declined on Monday, 06 July 2015, , as risk aversion selloff triggered amid uncertainty over Greece's future after Greece voted to reject the terms of its current bailout agreement. The MSCI Asia Pacific Index slid 2% to 143.52.
Greece on Sunday has voted strongly to reject austerity terms of a bailout by international creditors, jeopardizing country's tenuous financial position and casting a cloud over its membership in the Euro Area. Over the weekend, 61% of voters rejected the terms of new financial aid, which included demands for tax hikes and pension cuts in Greece. Greece has now entered unknown economic and financial territory, with no clear path to continued European aid.
Germany and France are calling for a special summit of eurozone leaders, as a Greek failure to reach a deal with its creditors could trigger the country's exit from the eurozone. Eurozone leaders will reportedly hold an emergency meeting in Brussels tomorrow, 7 July 2015, to work out their response to the Greek vote and the next steps in any negotiations, which have been stalled since the referendum was announced. Meanwhile, Yanis Varoufakis resigned as Greece's finance minister today, 6 July 2015, a day after Greeks voted resoundingly to reject the austerity terms of a bailout. Meanwhile, the European Central Bank's (ECB) Governing Council will reportedly hold a conference call today, 6 July 2015, to discuss Greece's monetary lifeline, the Emergency Liquidity Assistance program, which provides vital funds to the country's financial system.
The Greece government will now try to renegotiate a new bailout package with the lenders. Greece had been locked in negotiations with its creditors for months when the Greek government unexpectedly called a referendum on the terms it was being offered. Banks have been shut and capital controls in place since last Monday, after the ECB declined to give Greece more emergency funding. Withdrawals at cash machines have been limited to euro 60 per day.
Greece is due to pay 3.5 billion euros ($3.9 billion) to the ECB on 20 July 2015. If it misses that payment, the ECB is widely expected to cut off emergency funding to Greek banks, a move that would likely lead to their collapse.
Among Asian bourses
Nikkei tanks 2.1%
Japanese share market ended steep lower, registering first drop in five straight sessions, as investors sought safer havens for their investments after Greece voted 'No' to harsh bailout conditions in a crucial referendum held on Sunday. The Nikkei Stock Average dropped 427.67 points, or 2.08%, to end at 20112.12 points. The Topix index of all Tokyo Stock Exchange First Section issues surrendered 1.92%, or 31.73 points, to close at 1620.36 points.
Shares of export-related stocks tumbled after the yen appreciated against the euro and greenback, last quoted at 135.60 yen per euro and 122.56 yen per dollar. A strong yen is negative for Japanese exporters as it makes products costlier overseas and erodes their profits when repatriated. Carmakers such as Honda Motor Corp lost 1.8% to 3965 yen, Suzuki Motor Corp 3.3% to 3947 yen and Nissan Motor Co 1.9% to 1302 yen. Sony Corp fell 2.3% to 3423 yen and Panasonic Corp tumbled 2.7% to 1624 yen. Toshiba Corp ended 2.7% down at 42 yen on reports that an ongoing third-party investigation into accounting practices was finding more irregularities than previously estimated.
Likewise, financials saw strong reaction to the Greek news, with Mitsubishi UFJ Financial Group Inc down 3% to 876.30 yen, Mizuho Financial Group Inc down 3% to 263.50 yen, and Sumitomo Mitsui Financial Group Inc down 3.2% to 5416 yen.
Australia stocks skid 1.1%
The Australian share market ended sharply lower, as risk aversion selloff triggered amid uncertainty over Greece's future. Except bullion counter, all ASX sectorial indices closed down, with shares of energy, mining, industrial, and financial companies being top losers. The benchmark S&P/ASX 200 Index declined 63.30 points, or 1.14%, to 5475 points, while the broader All Ordinaries Index lost 64.70 points, or 1.17%, 5463.30 points.
Shares of resources and energy players were hardest hit in Sydney market after plunge in base metal and crude-oil futures. International benchmark Brent futures were down over a percentage point at $59.63 per barrel at 0650 GMT, and U.S. crude futures were at $54.98 a barrel, down almost $2 since they last traded before the July 4 national holiday. Among miners, Shares of BHP Billiton declined 2.2% to A$26.01, Rio Tinto 2.6% to A$51.16, and Fortescue Metals Group 5.8% to A$1.715. Among energy stocks, Woodside Petroleum tanked 1.8% to A$34.12, Oil Search 4% to A$6.79 and Santos 3.4% to A$7.74.
Australia inflation was 1.5% in the 12 months to June, up from an annual rate of 1.4% in May, according to the TD Securities-Melbourne Institute monthly inflation gauge. The RBA's target range is inflation of 2 to 3%.
China stocks rebound after Govt. unleashes support measures
China's stock market ended higher after rollercoaster ride, registering first gain in four straight session and defying selloff in regional bourses, after a raft of support measures unleashed over the weekend calmed jittery sentiment. The Shanghai Composite Index rebounded 89 points, or 2.41%, to end at 3775.91. Earlier in the afternoon session, the bourse pulled back into neutral territory after surging as high as 7.8% at the start of trade.
China's government and central bank launched a wave of drastic policies over the weekend to help save the markets, including the People's Bank of China vowing "liquidity support" to the state-backed margin-finance entity, as well as a reported suspension of initial public offerings.
After the stock market close on Friday, the China Securities Regulatory Commission (CSRC) said China would cut initial public offerings (IPOs) and capital raisings and support long-term investors entering the market to help stabilize prices. The People's Bank of China (PBOC) also rolled over 250 billion yuan of medium-term loans to banks late on Friday to ensure adequate liquidity in the system. Meanwhile, China's top 21 securities brokerages said on Saturday that they would collectively invest at least 120 billion yuan ($19.3 billion) to help stabilize the country's stock markets after a slump of nearly 30% since mid-June. Late Sunday, the top securities regulator said the People's Bank of China would provide liquidity assistance to China Securities Finance Corp., a company owned by the stock regulator. The company will use the money to lend to brokerages, which could then make loans to investors to buy stocks.
Total of five out of ten SSE industry groups advanced, with financial issue leading gains, followed by consumer staples, up 2.3%, industrials up 1.5%, consumer discretionary up 1% and energy up 0.3%. on the downside, information technology issue was hardest hit, down 3.2%, meanwhile telecommunication services issue declined 0.9%, utilities 0.7%, and materials 0.4%.
Hong Kong stocks fall
The Hong Kong stock market tumbled in panic selling, amid uncertainty over Greece's future after Greece voted to reject the terms of its current bailout agreement. The benchmark index opened firmer and soared nearly 200 points before it plunged 1,314 points at one stage. The Hang Seng Index stumbled 827.83 points or 3.18% to finish at 25236.28 points. The index was down 11.3% since its April high, entering correction territory, defined as a drop of more than 10%. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, dropped 377.55 points, or 3%, to 12231.43 points. Turnover increased to HK$212.7 billion from HK$148.9 billion on Friday.
Banks and financial stocks declined, with companies having most of business exposure to Europe were hit hard. HSBC Holdings fell 2.4% and Standard Chartered lost 2.1%. Exchange-operator Hong Kong Exchange & Clearing sank 9.6% after Goldman Sachs reportedly downgraded its rating on the stock to sell and slashed its target price. CCB and ICBC slipped 2.8% and 1.6%. ABC and BankComm dipped 1.3% and 2.4%.
Similarly, Chinese insurers also slid across the board. Ping An Insurance and China Life fell 4% and 2%. PICC Group (01399) plunged 4.5%.
Sensex turns positive as Greece jitters subside
Indian stock market closed higher after recouping losses late afternoon, with banking, cement, pharma stocks and index heavyweights HDFC, ITC, Reliance Industries (RIL) and L&T leading a strong intraday rebound. As per provisional closing, the S&P BSE Sensex was up 134.79 points or 0.48% at 28,227.58. The Nifty was up 37.25 points or 0.44% at 8,522.15.
Kotak Mahindra Bank rose 1.33%. As per reports, the Foreign Investment Promotion Board (FIPB) on Friday, 3 July 2015 cleared the bank's proposal to raise foreign investment limit to 55% from 49%. Kotak Mahindra Bank had approached FIPB after the Reserve Bank of India barred overseas investments in the bank as foreign shareholding hit the permissible threshold following the merger of ING Vysya Bank with Kotak Mahindra Bank.
Foreign portfolio investors (FPIs) bought Indian shares worth a net Rs 356.29 crore during the previous trading session on Friday, 3 July 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 220.61 crore on Friday, 3 July 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 1.1% to 9255.96. South Korea's KOSPI lost 2.4% to 2053.93. New Zealand's NZX50 dropped 1.1% to 5776.62. Singapore's Straits Times index slipped 0.3% at 3332.94. Indonesia's Jakarta Composite index melted 1.3% to 4916.741. Malaysia's KLCI lost 1% to 1717.05.
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