Markets in choppy waters as Grexit looms
Asian markets started Monday on a negative note after Greeks voted ‘No’ to new harsh bailout terms in a referendum.
Japan’s Nikkei index fell 1.6 percent in early trading, and the Kospi index in South Korea lost 1.7 percent. The stock market in Australia was down 1.3 percent.
Meanwhile, the euro fell 0.6 percent against the dollar to $1.1042 amid increasing risks of the eurozone losing a member.
The Japanese yen on the other hand strengthened, trading around 122.3 versus the dollar as investors sought saver havens for their investments. Bank of Japan Governor Haruhiko Kuroda said the central bank was monitoring developments carefully.
Meanwhile, senior South Korea economic and financial policymakers planned to hold an early meeting Monday to assess the situation.
China’s markets, however, bucked the trend as they were boosted by a series of financial policy decisions over the weekend. China's Shanghai Composite index gained 5.3 percent after opening up even higher.
The uptick came following China’s decision on Saturday to invest $19.3 billion to help stabilize the country's stock markets.
The impact from the Greek decision on financial markets also seemed limited for now amid assumptions that the European Central Bank would step in with a pledge of extra liquidity.
But the fallout is just beginning to unfold and much depends on whether the ECB is going to limit the spread of a contagion with liquidity support for the Greek banks.
Some analysts said the chances of a "Grexit" is now at 70 percent, meaning the eurozone is reluctant more than anytime to pledge fresh help to the teetering Greek economy.
Prime Minister Alexis Tsipras' victory in the referendum has made a deal between Greece and its lenders more difficult. International creditors have been demanding Greece adopt new restrictive measures for its finances in order to be granted a new loan.
In the Sunday referendum, 61 percent of voters rejected the terms of new financial aid in return for new tax hikes sand pension cuts.
The outcome, more definitive than polls had predicted, has put Greece on the brink of leaving the eurozone which could have unpredictable consequences for the bloc.
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