Asian markets jittery over Greece woes, China profit-taking

File photo of Hong Kong Stock Exchange (Photo: AFP/Philippe Lopez)

HONG KONG: Concerns about Greece's plans to renegotiate its bailout rattled Asian markets and pressured the euro on Thursday (Feb 5), while Shanghai and Hong Kong shares ended down despite China cutting its funds reserve requirement for banks.

Traders mostly took their cue from New York, which was hit by news that the European Central Bank would not allow Greek lenders to use government bonds to borrow cash, cutting off much-needed access to liquidity.

Tokyo tumbled 0.98 per cent, or 174.12 points, to finish at 17,504.62 despite Sony surging 12 per cent to a five-year high on an improved earnings outlook. Sydney rose 0.58 per cent, or 33.64 points, to 5,810.98 - its 11th straight day of gains, while Seoul lost 0.51 per cent, or 9.95 points, to 1,952.84.

Shanghai, which surged 2.45 per cent in early trade, ended 1.18 per cent lower, shedding 37.59 points to 3,136.53. Hong Kong added 0.35 per cent, or 85.73 points, to 24,765.49 having jumped 1.4 per cent just after the opening bell.

Under the terms of its bailout, Greece's banks had been given a waiver to use government bonds - which have a junk rating - as collateral as long as Athens stuck to its obligations. But the ECB said that it would no longer allow Greek banks to use government debt as collateral for loans after the newly elected Syriza party vowed to re-negotiate the terms of its international bailout.

The announcement came hours after new Greek Finance Minister Yanis Varoufakis held talks with ECB chief Mario Draghi, the latest stop in his Europe-wide charm offensive to drum up support for a new deal. Varoufakis will also hold talks with his German counterpart Wolfgang Schaeuble on Thursday, a meeting that will be closely watched as Germany, the eurozone's largest economy, is a key supporter of Europe's austerity drive.

Athens said the move will have "no adverse impact" on its financial sector, saying it would be "fully protected," with other liquidity channels still available. However, Greece's borrowing rate soared above the symbolic level of 10 per cent in early European trade Thursday, from 9.678 per cent the day before.

On Wall Street, the Dow - which had surged during the day - ended flat on Wednesday while the S&P 500 fell 0.42 per cent and the Nasdaq lost 0.23 per cent.

FRESH CHINA EASING

The euro ended Wednesday at US$1.1334 and 132.81 yen in New York, from US$1.1470 and 135.00 yen earlier in Asia. On Thursday in Tokyo, the single currency bought US$1.1337 and 132.78 yen. The dollar was 117.12 yen on Thursday against 117.18 yen.

Shanghai stocks also sank despite China's central bank on Wednesday cutting the percentage of cash lenders must keep in reserve to kickstart the mainland economy. It was the first across-the-board cut since May 2012.

Official data last week showed the economy grew at its slowest pace in 24 years in 2014, while two separate gauges indicated manufacturing activity slipped in January. It was the latest move by authorities to juice the economy after the bank in November unveiled a surprise cut in interest rates.

"The move is aimed at helping the real economy and should boost lending to the private sector," Zhou Hao, a Shanghai-based economist at ANZ told Bloomberg News. "It's likely that there will be another reserve-requirement ratio cut early in the second quarter."

In oil markets, US benchmark West Texas Intermediate for March delivery was down 55 cents at US$47.90 a barrel and Brent crude for March eased 71 cents to US$53.45.

Gold fetched US$1,260.30 an ounce, against US$1,267.80 on Wednesday.

IN OTHER MARKETS:

- Taipei was flat, edging down 1.87 points to 9,512.05. Taiwan Semiconductor Manufacturing Co fell 0.34 per cent to NT$145.5 while Hon Hai Precision Industry closed 0.23 per cent lower at NT$87.3.

- Wellington added 0.21 per cent, or 12.28 points, to 5,797.59. Air New Zealand was up 1.97 per cent at NZ$2.59 and Spark lifted 0.87 per cent to NZ$3.49.

- Manila eased 0.54 per cent, or 41.82 points, to 7,674.24. SM Investments fell 0.94 per cent to 896.50 pesos, Philippine Long Distance Telephone shed 0.13 per cent to 3,082 pesos, while Ayala Land was down 1.53 per cent at 35.45 pesos.

- Kuala Lumpur closed flat, up 0.19 of a point, at 1,803.21. Telekom Malaysia added 0.14 per cent to 7.00 ringgit, Public Bank rose 0.44 per cent to 18.44, while Tenaga Nasional lost 0.68 ringgit to 14.54 ringgit.

- Mumbai dipped slightly by 0.11 per cent, or 32.14 points, to end at 28,850.97 points. Tata Power Company fell 7.48 per cent to 83.45 rupees, while information technology major Wipro gained 3.18 per cent to 637.30 rupees.

- Jakarta ended down 0.67 per cent, or 35.39 points, at 5,279.90. Palm oil firm Astra Agro Lestari gained 3.49 per cent to 24,450 rupiah, while retailer Ace Hardware Indonesia slipped 1.33 per cent to 740 rupiah.

- Singapore closed down 0.32 per cent, or 10.99 points, at 3,406.58. Public transport firm ComfortDelgro rose 1.71 per cent to S$2.97 while DBS Bank fell 0.92 per cent to S$19.42.