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Shares in Asian markets rise on Greek confidence vote | Shares in Asian markets rise on Greek confidence vote |
(about 3 hours later) | |
Asian shares closed higher on Wednesday on optimism that Greece will not default on its debts, after the government won a vote of confidence. | |
Japan's Nikkei 225 index closed up more than 1.9%, South Korea's KOSPI by 1.2% and Australia's S&P almost 1%. | |
The euro, Europe's shared currency, was trading at $1.4384, down from the $1.4435 it hit after the vote result, but well up on the $1.4073 it touched last week. | |
Some warned the good mood may not last. | |
"The market is up on Greece, but it's a temporary rise on a news event," said Mitsushige Akino, from Ichiyoshi Investment Management. | "The market is up on Greece, but it's a temporary rise on a news event," said Mitsushige Akino, from Ichiyoshi Investment Management. |
"Fundamentals haven't changed a notch." | "Fundamentals haven't changed a notch." |
Analysts say as well as the continuing debt problems in the eurozone, investors are also worried about inflationary pressures in fast-growing economies in Asia. | |
Contagion fears | Contagion fears |
Even though the Greek government won the confidence vote, there are still fears the problems may spread to bigger European economies such as Portugal, the Irish Republic and Spain. | |
As well as its impact on the global financial system, any worsening of the conditions in Europe would also have a negative affect on trade from Asia. | |
"The Asian export machine has been slowing of late, perhaps because of these issues in Europe and the instability we've seen in Greece," said Andrew Robinson from Saxo Capital Markets. | "The Asian export machine has been slowing of late, perhaps because of these issues in Europe and the instability we've seen in Greece," said Andrew Robinson from Saxo Capital Markets. |
"If it were to spread to Spain, Spain is a much larger economy, obviously it would have its impact on Asian exports." | "If it were to spread to Spain, Spain is a much larger economy, obviously it would have its impact on Asian exports." |
'Sigh of relief' | 'Sigh of relief' |
Analysts said the fact that the Greek government won the confidence vote meant that the markets had one risk factor fewer to worry about. | |
"On a short-term basis, markets are breathing a sigh of relief," said Kelvin Tay of UBS bank. | |
"You are seeing that reaction across the Asian markets," he added. | "You are seeing that reaction across the Asian markets," he added. |
However, Mr Tay warned that given the extent of the problems in Greece, the current solution was not sufficient to solve them. | However, Mr Tay warned that given the extent of the problems in Greece, the current solution was not sufficient to solve them. |
"We believe that for the solution to be found, there needs to be a Greek debt restructuring," he said. | "We believe that for the solution to be found, there needs to be a Greek debt restructuring," he said. |
"This solution will only last them for the next 12 months," Mr Tay added. |