Asian stocks sharply lower over Greece fears
TOKYO—Asian markets slumped Monday over renewed fears of a Greek sovereign default and its impact on the global economy, as investors fretted over the failure of Athens to meet its budget deficit target.
The euro slid to a more than eight-month low versus the dollar with no end in sight to the European debt crisis as eurozone finance ministers prepared to meet in Luxembourg to discuss Greece’s progress.
The acknowledgment by Greece that it would miss its deficit targets raised further uncertainty over whether its fresh budget cuts would be enough for it to secure the next tranche of its multibillion-euro bailout, dealers said.
Athens needs the eight-billion-euro payment to avoid bankruptcy next month. On Sunday it said its budget deficit would be 8.5 percent of GDP this year, above the level agreed under the terms of the bailout.
Stocks plunged around Asia, with Hong Kong leading losses on major bourses, down 4.38 percent. The benchmark Hang Seng Index lost 770.26 points to end at 16,822.15 — its lowest close since May 2009.
Tokyo stocks closed down 1.78 percent as exporters tumbled on a weaker euro despite an improvement in the Bank of Japan’s closely watched Tankan survey of business confidence.
The benchmark Nikkei 225 index closed 154.81 points down to 8,545.48, after dipping 2.8 percent at one point in afternoon trade.
Worries over the eurozone overshadowed the Tankan survey, which showed Japanese business sentiment turned positive in the third quarter as companies recovered from the impact of the March 11 earthquake and tsunami.
“It’s quite difficult to find a catalyst for a rebound concerning the Greek problem and US economic conditions,” Yutaka Miura, a senior technical analyst at Mizuho Securities, told Dow Jones Newswires.
Sydney was off 2.78 percent at the close, with the benchmark S&P/ASX 200 111.6 points lower at 3,897.0 points, while Wellington was down 0.83 percent.
Singapore, Indonesia, the Philippines, Malaysia, Taiwan and Thailand were all sharply down at the close. South Korea and China were closed.
The downbeat mood was reflected when European stock markets opened Monday, with Frankfurt shedding more than 3 percent and London, Paris and Madrid markets dropping more than 2 percent.
Finance ministers of the 17 countries sharing the beleaguered euro currency were to meet in Luxembourg to discuss Greece’s progress, as the bloc grapples with how to safeguard its banks and boost the firepower of its 440 billion euro rescue fund.
“It is far from a given that policymakers will succeed in turning the tide in markets in the final quarter of the year,” Sharon Zollner, senior economist at ANZ Bank in Wellington, told Dow Jones.
The United States and many Asian markets saw their worst quarterly losses since the 2008 financial crisis in the fear-fueled third quarter, as investors dumped equities for safer assets on worries over a global recession.
Eurozone ministers meeting on Monday will mull how to avert a Greek default, which could send stock markets into a panic, deal an unprecedented blow to the European currency and bring the world back to the brink of a fresh financial crisis.
Inspectors from the International Monetary Fund, the European Union and European Central Bank are in Athens to decide whether Greece has done enough to receive the crucial bail-out instalment.
On Sunday, Greece said its budget deficit would be cut in 2011 and 2012 after its cabinet approved heavy budget cuts that would see thousands of public sector workers dismissed, but would still miss targets set by the EU and IMF.
Austrian Finance Minister Maria Fekter told Germany’s Welt am Sonntag newspaper she thought the eurozone was likely to grant Greece a new slice of aid.
“The likelihood that the next eight-billion-euro ($11 billion) slice of aid will be paid out to Greece is, in my view, clearly higher than the likelihood it will not be paid,” she said.
The single European currency fell to as low as $1.3311 in Tokyo trade, down from $1.3451 in New York late Friday, its lowest level against the greenback since January 18.
The European unit sagged to 102.72 yen from 103.12 yen.
The dollar was flat at 76.89 yen.
Crude prices followed equities down in Asian trade as a strengthening greenback weighed on oil markets, analysts said.
New York’s main contract, light sweet crude for delivery in November, shed $1.27 to $77.93 a barrel in the afternoon.
Brent North Sea crude for November delivery dipped $1.22 to $101.54.
“There is a selling in oil futures tracking equities and the strengthening of the US dollar,” Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore, told AFP.
Gold was at $1,657 per ounce at 1115 GMT, up from Friday’s New York close of 1,624.80.
In other markets:
— Taipei dived 211.41 points, or 2.93 percent, at 7,013.97.
Leading smartphone maker HTC shed 3.21 percent to Tw$663.0 while Taiwan Semiconductor Manufacturing Co was 2.0 percent lower at Tw$68.6.
— Kuala Lumpur sank 19.61 points or 1.4 percent to 1,367.52.
RHB Capital lost 4.4 percent to 6.69 ringgit, Hong Leong Financial Group dipped 4.2 percent to 10.44 and IOI Corp shed 4.1 percent to 4.46.
MMC Corp added 0.8 percent to 2.60 ringgit and YTL Corp gained 0.8 percent to 1.34.
— Singapore slipped 53.76 points, or 2.01 percent, to 2,621.40.
Olam International fell 1.76 percent to 2.23 and United Overseas Bank dived 1.06 percent to16.82 .
— Bangkok plunged 46.90 points, or 5.12 percent, to 869.31.
Banpu lost 24 baht to 500, while PTT fell 16 baht to 244.
— Jakarta retreated 200.32 points, or 5.64 percent, to 3,348.70.
— Manila closed 133.82 points, or 3.34 percent, lower at 3,865.83.
Top-traded Metropolitan Bank and Trust fell 5.30 percent to 62.50 pesos while SM Prime Holdings dropped 3.44 percent to 11.78 pesos.
— Indian shares fell 1.84 percent, or 302.31 points, to 16,151.45.
Concerns about slowing domestic economic growth, high inflation and rising interest rates weighed on market sentiment, dealers said.
Shipping, metal and property stocks were hardest hit.
Top property firm DLF fell 7.82 percent to 201.55 while state-run Shipping Corporation of India fell 9.62 percent to 75.2.
