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Asian Markets’ Reaction Is Moderate After Greek Vote Muted Dismay in Asian Markets After Greek Vote
(35 minutes later)
HONG KONG — Asian stock markets dropped on Monday morning in early trading but did not plunge, as investors reacted with muted dismay to the results of the Greek referendum and showed nervousness about steep declines in China’s stock market over the past three weeks.HONG KONG — Asian stock markets dropped on Monday morning in early trading but did not plunge, as investors reacted with muted dismay to the results of the Greek referendum and showed nervousness about steep declines in China’s stock market over the past three weeks.
But the Shanghai market jumped sharply in early trading as the government poured money into brokerage firms to help them and their customers buy shares. The market leapt 7.8 percent at the start, but surrendered half those gains in the first 10 minutes of trading. But the Shanghai market jumped sharply in early trading as the government poured money into brokerage firms to help them and their customers buy shares. The market leapt 7.8 percent at the start, but surrendered half those gains in the first 10 minutes of trading and was up 3 percent by late morning. The smaller Shenzhen stock market also started very strong but was flat in late morning.
Oil prices fell 3.6 percent, as traders placed bets that recent events could lead to slower global economic activity and weaker demand. Bond prices rallied in Australia, and gold and silver prices climbed, as investors sought safety in response to uncertainty about whether Greece would stop using the euro and about whether mainland China’s economy would slow after investors there lost $2.7 trillion in the stock market over the past three weeks. Oil prices fell 3.4 percent, as traders placed bets that recent events could lead to slower global economic activity and weaker demand. Bond prices rallied in Australia, and gold and silver prices climbed, as investors sought safety in response to uncertainty about whether Greece would stop using the euro and about whether mainland China’s economy would slow after investors there lost $2.7 trillion in the stock market over the past three weeks.
The Nikkei 225-share index in Japan fell 1.4 percent, and the Kospi index in South Korea dropped 1.3 percent in early trading. The stock market in Australia, where mining companies are heavily dependent on Chinese demand, was down 1.6 percent. The Nikkei 225-share index in Japan fell 1.6 percent, and the Kospi index in South Korea dropped 1.7 percent in early trading. The stock market in Australia, where mining companies are heavily dependent on Chinese demand, was down 1.3 percent.
Some of the sharpest moves involved currencies. The euro fell 0.8 percent against the dollar, to $1.1018, while the Australian and New Zealand dollars dipped slightly. Kymberly Martin, a currency strategist at the Bank of New Zealand, said that the Greek vote and China’s market decline both tended to have similar effects on currencies and stock markets. Some of the sharpest moves involved currencies. The euro fell 0.6 percent against the dollar, to $1.1042, while the Australian and New Zealand dollars dipped slightly. Kymberly Martin, a currency strategist at the Bank of New Zealand, said that the Greek vote and China’s market decline both tended to have similar effects on currencies and stock markets.
“It’s very difficult to disentangle what proportion is the eurozone and what proportion is China,” she said. “Probably both factors are affecting the market in the same direction.”“It’s very difficult to disentangle what proportion is the eurozone and what proportion is China,” she said. “Probably both factors are affecting the market in the same direction.”
E. William Stone, the executive vice president and chief investment strategist at the PNC Asset Management Group in Philadelphia, said that most investors had been expecting a “yes” vote on the Greek referendum; instead, with more than 90 percent of the vote tallied, more than 60 percent of the voters had chosen “no.” “I won’t be surprised if we get some larger sell-offs” as the day progresses, he said.E. William Stone, the executive vice president and chief investment strategist at the PNC Asset Management Group in Philadelphia, said that most investors had been expecting a “yes” vote on the Greek referendum; instead, with more than 90 percent of the vote tallied, more than 60 percent of the voters had chosen “no.” “I won’t be surprised if we get some larger sell-offs” as the day progresses, he said.
Unlike Ms. Martin, he said that Greece would be the dominant influence on markets, particularly in Europe and the United States. While the Shanghai stock market has lost more than a quarter of its value since June 12, it is still up nearly 80 percent from a year ago.Unlike Ms. Martin, he said that Greece would be the dominant influence on markets, particularly in Europe and the United States. While the Shanghai stock market has lost more than a quarter of its value since June 12, it is still up nearly 80 percent from a year ago.
“It almost seems like the Chinese authorities are overreacting,” he said.“It almost seems like the Chinese authorities are overreacting,” he said.
On Monday, China’s state-run media issued a volley of commentaries declaring faith in the government’s ability to restore confidence to the stock market.On Monday, China’s state-run media issued a volley of commentaries declaring faith in the government’s ability to restore confidence to the stock market.
“After the storm, comes the rainbow,” said a commentary in People’s Daily, the Communist Party’s leading newspaper. Investors were mistaken to worry about the level of debt behind the rise in stock prices, it said. “What the broad numbers of investors need at this instant is confidence, not panic.” ”After the storm, comes the rainbow,” said a commentary in People’s Daily, the Communist Party’s leading newspaper. Investors were mistaken to worry about the level of debt behind the rise in stock prices, it said. “What the broad numbers of investors need at this instant is confidence, not panic.”
As trading opened in Hong Kong, where shares were down 2.9 percent, investors were paying considerably more attention to China than Greece.
“The Greek referendum should not influence too much the Asian stocks — the actions of China, with its huge economy, will have more impact,” said Roger Lam, a 63-year-old retired office worker, as he watched computer monitors at a downtown stock brokerage house. “Anyone who says China does not have the ability to hold up the stock markets in China is a fool. They have just not seen the mighty power of the Chinese government.”
Daisy Kong, a 52-year-old housewife who was checking stock prices at the same brokerage house, agreed: “The Greek referendum should have little impact on stocks in Asia — it’s economy is too small. Anyway, it is ludicrous that Greece, as a borrower, can be even more fierce than the lender.”
She shared Mr. Lam’s bullishness about the mainland Chinese stock market. “If the Chinese government has the will, it certainly has the ability to stop the slide in the Chinese stock market,” she said. “The Chinese government has so much money, they don’t need to borrow like Greece.”