Asian stocks fell early Monday after Greeks refused creditors'
terms for a bailout, potentially setting the stage for its exit
from the eurozone.
Investors are bracing for a bumpy day of trading, after
preliminary results of Greece's referendum Sunday show a victory
for the "no" campaign, which rejected austerity policies set out by
the eurozone and the International Monetary Fund. Creditors have
said the outcome imperils future compromise and puts Greece closer
to leaving the currency bloc.
"The negative vote was not entirely unexpected, but it sends
Greece's trajectory closer to a eurozone exit, which would be
unprecedented," says Rakuten Securities senior market analyst
Masayuki Doshida.
Japan's Nikkei 225 Stock Average shed 1.3% in early trading
while Australia's S&P/ASX 200 was down 1.6%. South Korea's
Kospi was down 0.9%.
"Much of the trauma generated by Greece's situation was priced
into the market last Monday," says Kenichi Hirano, CEO at
Tokyo-based K Asset Management, referring to the day the Nikkei
suffered its second-worst percentage fall of the year. "The impact
on Japan should be more limited this time,
Earlier Monday, euro sank 0.9% to $1.1017 against the U.S.
dollar and fell 1.1% against the Japanese yen as investors sought
safer assets. The yen also rose 0.3% against the dollar. Gold
prices rose 0.8% to $1,172.20 per troy ounce, while Brent crude
futures dropped 1.1% to $59.69.
Investors also will assess Beijing's cranked up efforts over the
weekend to stem a three-week selloff in Chinese shares that has
wiped out about $2.4 trillion in value. China's central bank
indirectly will help investors borrow to buy shares and regulators
agreed to halt all new initial public offerings.
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. It marks the first time
central-bank funds will be directed to institutions other than
banks.
Earlier in the weekend, China's big state-controlled securities
firms, mutual funds and a unit of China's giant sovereign-wealth
fund also pledged to buy shares. The Securities Association said
that 21 brokerages pledged to try to increase investments in the
stock market as long as the Shanghai Composite Index stays below
4,500.
"If China does not find support today, the disorder could be
monstrous," analysts from brokerage IG wrote.
Still, other brokerages are more hopeful. Regulators have more
options at hand to stabilize the Chinese market, and the unwinding
of margin positions could encourage more risk taking in future,
said HSBC.
"The regulator is committed to prevent further A-share sharp
falls. And more favorable policies are expected to be rolled out to
stabilize the market if volatility remains high," analysts from the
bank wrote in a research report. "We estimate that the worst of
deleveraging and forced selling in the A-share market could be
behind us."
--Bradford Frischkorn contributed to this article.
Write to Gregor Stuart Hunter at gregor.hunter@wsj.com
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