Greek 'no' vote spurs risk-off sentiment in Asian stocks

Stock markets in China received a boost from a flurry of official policy moves over the weekend, while investors in other regional markets sought safer havens for their investments on Monday after Greece voted 'No' to harsh bailout conditions.

 

In a crucial referendum held on Sunday, 61 percent of voters rejected the terms of new financial aid which included demands for tax hikes and pension cuts in Greece. The result - more definitive than polls had predicted - will likely increase Greece's chances of exiting the euro zone. 

 

"The unexpected 'no' vote in the Greek referendum will produce significant uncertainty over the next 48 hours. It will be very difficult for a new deal to be struck without significant concessions from the Greeks while [Prime Minister Alexis] Tsipras' victory will make that unlikely," analysts from BNP Paribas wrote in a note, adding that the chance of a "Grexit" is now at 70 percent. 

Amid increasing risks of the euro zone losing a member, the euro fell more than 1 percent to a one-week low of USD 1.0967 in early Asian trade, from around USD 1.1112 late on Friday. The Australian dollar lost 0.3 percent of its value against the US dollar, hitting USD 0.7485 - its lowest level since May 2009. 

 

On the other hand, the Japanese yen strengthened on the back of safe haven bids, trading around 122.3 versus the greenback. 

 

US S&P index futures fell 1.5 percent on Monday, indicating a lower open for Wall Street which was closed for the US Independence Day holiday on Friday.

 

Governments in Asia are also expected to react to the latest developments in Greece, with senior South Korea economic and financial policymakers scheduling an early meeting on Monday. Meanwhile, Bank of Japan Governor Haruhiko Kuroda said the central bank will monitor financial market developments carefully to ensure Japan responds smoothly to any market response.

 

 

China's Shanghai Composite index soared as high as 7.8 percent briefly before trimming gains to 5.3 percent. The CSI 300 index opened up 6.1 percent, while the smaller Shenzhen Composite leaped 4.7 percent.

 

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 percent since mid-June. 

 

"Today is going to be very interesting. Apart from Greece, we have the reaction from Chinese authorities over the weekend which will impact markets all over Asia," Adam Reynolds, APAC CEO of Saxo Capital Markets, told CNBC. "There's a very good chance we see a strong bounce in China today which will offset some of the concern from Greece, but it remains to be seen how long the bounce will last for." 

 

Nikkei skids 1.4 percent 

 

Japan's Nikkei 225 fell in early trade, with a stronger local currency taking a toll on export-oriented plays. 

 

Carmakers such as Honda and Suzuki Motor opened down 2 percent each, while Komatsu sagged 1.8 percent. Toshiba fell nearly 5 percent on the back of an ongoing third-party investigation into accounting practices. 

 

Banking counters were similarly sold-off; Mizuho Financial and Sumitomo Mitsui Financial Group receded 2.5 and 2.3 percent, respectively. 

 

 

Australia's S&P ASX 200 index extended its negative streak amid a broad-based selloff. 

 

Miners and oil producers were heavily-hit in particular. Market bellwether BHP Billiton plunged 2.1 percent, while Rio Tinto eased 1.7 percent. Oil Search and Santos shaved off 4 and 2.3 percent, respectively, after U.S. crude fell 71 cents to $54.81 and Brent was down more than 1 percent at $59.60 a barrel in early Asian trade. 

 

Losses among financial majors also weighed on the bourse; Macquarie Group declined 1.6 percent, while Commonwealth Bank of Australia led losses in the banking sector with a 1.5 percent fall. 

 

 

South Korea's Kospi index kicked off a brand new trading week on the back foot as the surprise results in Greece's referendum ignited a wave of risk aversion.

 

Blue chips were among the biggest laggards in early trade; the top weighted stock Samsung Electronics retreated 1.4 percent ahead of its earnings guidance on Tuesday, while Hyundai Motor and steelmaker Posco tanked nearly 2 percent each. 

 

 

The FTSE Bursa Malaysia KLCI index is on track for another day of modest losses following a news report by Wall Street Journal that said nearly $700 million of deposits were flowed into what are believed to be the personal bank accounts of Malaysian Prime Minister Najib Razak. Over the weekend, the embattled Prime Minister said he will decide whether to take legal action against the the WSJ. 

 

Meanwhile, the ringgit dropped 0.7 percent of its value against the greenback early Monday, hitting its lowest level since September 1998.