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China shares jump despite Greek vote Asia shares slide on Greek 'no' vote
(about 5 hours later)
Mainland Chinese shares surged nearly 8% on Monday despite the rest of Asian markets trading lower on Greece's rejection of austerity demands. Asian stock markets headed lower after Greek voters overwhelmingly rejected austerity demands from creditors in Sunday's referendum.
The Shanghai Composite was up 2.6% to 3,783.69 after the government announced measures over the weekend to stabilise the tumbling stock markets. The euro fell across the board after Greece rejected the conditions of a bailout package, increasing the odds of the country's exit from the eurozone.
In an unprecedented move, brokerages and fund managers vowed to buy massive amounts of stocks backed by the state. It was at $1.1014 against the dollar in Asian trade, having recovered slightly from one-month lows hit earlier.
But, Japan's Nikkei 225 was down 1.3% to 20,281.99 on Greece's "no" vote. Hong Kong's Hang Seng was down 3.5% at 25,142.56 - leading Asia's losses.
The euro fell across the board after Greek voters overwhelmingly rejected the conditions of a bailout package from its creditors in a referendum, increasing the odds of the country's exit from the eurozone. Japan's Nikkei 225 ended 2.1% lower at 20,112.12.
The euro was at $1.1055 in Asian trade, recovering from one-month lows it hit earlier in the day. The yen - often viewed as a haven currency in times of uncertainty - rallied against the dollar and euro.
Investors fled to the safe haven of the yen that rallied against the dollar and euro after Greek voters rejected the bailout terms by a wider margin than expected. The euro fell 1.5% to a six-week low of 133.70 yen, but then recovered some losses to trade up to 135.45. However, it is still down from Friday's 136.185 yen.
The euro fell 1.5% to a six-week low of 133.700 yen, but then recovered some losses to trade up to 135.41. However, it is still down from Friday's 136.185 yen. Major commodities such as oil were also down, with the price of Brent crude falling more than 1% to $59.56 a barrel in Asian trade.
Major commodities such as oil were also down with the price of Brent crude falling more than 1% to $59.72 in Asian trade.
Officials step inOfficials step in
Governments and central banks in South Korea and Japan were set to meet later in the morning to handle the impact on the markets from Greece's "no" vote, they said. Japan's government and the Bank of Japan met to discuss the market impact from Greece's "no" vote.
"The direct economic and financial relations between Japan and Greece are limited. But government and BOJ (Bank of Japan) officials have held discussions" early this morning to ensure Japan responds smoothly to any market response as needed, Governor Haruhiko Kuroda said in a statement. "The direct economic and financial relations between Japan and Greece are limited. But government and BOJ (Bank of Japan) officials have held discussions" to ensure Japan responds smoothly to any market response as needed, said Bank of Japan governor Haruhiko Kuroda.
In South Korea, the benchmark Kospi index was down 0.8% to 2,088.66, while, Australia's S&P/ASX 200 index fell 1.3% to 5,468.30. In South Korea, the benchmark Kospi index closed down 2.4% at 2,053.93 - posting its biggest daily loss in three years.
Hong Kong's Hang Seng index was down 0.9% to 25,828.71 points. Meanwhile, Australia's S&P/ASX 200 index finished 1.1% lower at 5,475.
Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors said that while the Greek no vote means more uncertainty ahead for the eurozone, the impact on the markets will be short lived. Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors said that while the Greek "no" vote meant more uncertainty ahead for the eurozone, the impact on the markets would be short-lived.
"The threat of a flow on to other eurozone countries is likely to keep markets on edge in the short term," he said in a note."The threat of a flow on to other eurozone countries is likely to keep markets on edge in the short term," he said in a note.
"However, contagion is likely to be limited as the rest of Europe is now in far stronger shape than was the case in the 2010-12 euro zone crisis and defence mechanisms against contagion are now stronger." "However, contagion is likely to be limited as the rest of Europe is now in far stronger shape than was the case in the 2010-12 eurozone crisis and defence mechanisms against contagion are now stronger."
Support for China shares Volatile China trade
Mainland Chinese shares surged nearly 8% in morning trade after the government announced measures over the weekend to stabilise the tumbling stock markets.
In an unprecedented move, brokerages and fund managers vowed to buy massive amounts of stocks backed by the state.
However, the market failed to hold on to most of the gains achieved in the morning session, with the Shanghai Composite just 1.3% higher at 3,735.79 in afternoon trade.
On Monday, three Chinese asset managers said they would commit a combined 210m yuan ($33.85m: £21m) of their own money to buy equity funds, as part of a concerted effort by institutional investors to stabilise the market.On Monday, three Chinese asset managers said they would commit a combined 210m yuan ($33.85m: £21m) of their own money to buy equity funds, as part of a concerted effort by institutional investors to stabilise the market.
Harvest Fund Management said it would spend 50m yuan, Yinhua Fund Management would spend 90m yuan, and the asset management arm of Orient Securities would commit 70m yuan to buy equities.Harvest Fund Management said it would spend 50m yuan, Yinhua Fund Management would spend 90m yuan, and the asset management arm of Orient Securities would commit 70m yuan to buy equities.
Over the weekend, the China Mutual Fund Association said 25 fund firms pledged to buy shares, while another 69 fund firms said they would do the same, as part of emergency measures to boost investor confidence.Over the weekend, the China Mutual Fund Association said 25 fund firms pledged to buy shares, while another 69 fund firms said they would do the same, as part of emergency measures to boost investor confidence.
The Shanghai Composite has fallen nearly 30% over the last three weeks, despite an interest rate cut by the central bank the week earlier - and other measures to support the market. The Shanghai Composite has fallen nearly 30% over the past three weeks, despite an interest rate cut by the central bank the week earlier and other measures to support the market.