Asia markets mostly higher, Shanghai plunges again

People stand in front of an electronic stock board of a securities firm in Tokyo, Wednesday, July 1, 2015. Asian shares rose on Wednesday as investors watched to see the next step as Greece fell into arrears after failing to make a debt repayment on Tuesday. AP PHOTO/KOJI SASAHARA

HONG KONG–Asian markets mostly rose Wednesday as investors shrugged off Greece’s default, with Tokyo lifted by an upbeat survey on business confidence, but Shanghai’s volatile run continued, plunging more than five percent.

The euro edged down against the dollar after Athens failed to service its debt to the International Monetary Fund, and analysts warned of continued uncertainty, even after Greeks vote in a weekend referendum, which is effectively a poll on eurozone membership.

Tokyo rose 0.46 percent, or 93.59 points, to end at 20,329.32, Sydney climbed 1.04 percent, or 56.70 points, to 5,515.70 and Seoul added 1.14 percent, or 23.69 points, to end at 2,097.89.

Shanghai collapsed in the last hour to end 5.23 percent, or 223.52 points, lower at 4,053.70. The benchmark index gave up all Tuesday’s gains, resuming a downward spiral that has seen it drop more than 20 percent in just over two weeks.

Hong Kong and Bangkok were closed for public holidays.

As expected, Greece defaulted on its 1.5-billion-euro ($1.7-billion) IMF loan Tuesday after Prime Minister Alexis Tsipras shocked creditors and broke off bailout reform talks at the weekend, calling a July 5 plebiscite on creditors’ proposals.

The deadline to pay came and went after European leaders rejected a last-minute compromise from Tsipras, meaning five months of fraught talks had failed and making Greece the only developed country ever to default with the IMF.

The Fund froze its loan program to the government, while European Commission-European Central Bank liquidity assistance also expired on Tuesday.

Failure to make the payment “is not really the issue now, the bigger question is what response the ECB takes to the missed payment with respect to the provision of Emergency Liquidity Assistance,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., wrote in a client note Wednesday.

Heightened uncertainty

“Even following this Sunday’s referendum, there may still be more questions than answers, and so this heightened level of uncertainty could be part of the market backdrop for a while yet,” he said.

On currency markets the euro was mixed but managed to keep from plunging.

It bought $1.1109 and 136.26 yen Wednesday in Tokyo, against $1.1139 and 136.38 yen in New York.

“Any possibility that eurozone membership becomes fluid is a negative for the euro, but the market is not yet so concerned with it until other larger countries look like they will be on the same path,” said Ilya Feygin, a New York-based managing director and senior strategist at WallachBeth Capital LLC.

The dollar was at 122.69 yen compared with 122.44 yen.

Japan’s Nikkei index ticked higher after the central bank’s closely watched Tankan survey of business confidence improved in the April-June quarter from the previous two quarters, beating expectations.

Economists said the gain came on the back of a lower yen and a rise in domestic demand.

In China, Shanghai and the smaller Shenzhen markets continued to be pummeled by investors selling up after enjoying a yearlong rally that saw them add more than 150 percent.

Shenzhen plummeted 4.79 percent Wednesday.

The indexes have now entered a bear market as dealers cash in their profits and call in margin trades–when they borrow cash to invest.

“After the stock crash in the previous days, the market sentiment is still fragile and has not recovered yet,” Northeast Securities analyst Shen Zhengyang told AFP.

“The good news from the government since last weekend was not enough to push the market up. Investors are still waiting for stronger policy support.”

China’s leaders tried on Saturday to arrest the sell-off in shares by cutting interest rates for the fourth time since November while also lowering the amount of cash banks keep in reserve.

Wednesday saw the release of a survey showing manufacturing activity enjoyed marginal growth in June but missed forecasts as the world’s number two economy struggles to get back up to speed.

On oil markets US benchmark West Texas Intermediate for August delivery was 85 cents lower at $58.62 while Brent crude was down 78 cents at $62.81.

Gold fetched $1,172.54 compared with $1,173.87 late Tuesday.

In other markets:

— Taipei rose 0.56 percent, or 52.21 points, to 9,375.23.

Taiwan Semiconductor Manufacturing Co. closed 0.36 percent higher at Tw$141.0 while Hon Hai Precision Industry climbed 1.03 percent to Tw$98.0.

— Wellington added 1.18 percent, or 67.40 points, to 5,794.36.

Air New Zealand was up 1.57 percent at NZ$2.59 and Trade Me gained 1.47 percent to NZ$3.44.

— Manila closed 0.14 percent, or 10.65 points, higher at 7,575.15.

SM Prime Holdings added 0.10 percent to 20 pesos while Universal Robina was down 0.93 percent at 1.80 pesos and Jollibee Foods eased 0.96 percent to 195.40 pesos.

— Mumbai rose 0.86 percent, or 240.04 points, to end at 28,020.87 points.

Bharat Heavy Electricals rose 3.67 percent to 256.95 rupees, while Bajaj Auto fell 0.48 percent to 2,523.60 rupees.

— Singapore’s Straits Times Index closed 13.81 points, or 0.42 percent, higher at 3,331.14.

SingTel was up 5 cents or 1.19 percent at $4.26 while DBS was down 19 cents or 0.9 percent at $20.50.

— Malaysia’s key index gained 21.32 points, or 1.25 percent, to 1,727.96.

Maybank rose 0.33 percent to 9.17 ringgit, Telekom Malaysia added 3.67 percent to 6.78 while YTL lost 1.29 percent to 1.53 ringgit.

— Jakarta ended down 0.13 percent, or 6.60 points, to 4.904.06.

Indonesia-based construction company PT Waskita Karya Tbk gained 2.96 percent to 1,565 rupiah, while satellite TV company PT MNC Sky Vision Tbk slipped 10.34 percent to 1,300 rupiah.–Bloomberg News contributed to this story