Greek Referendum Hurts Asian Stocks

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) November 10, 2011 --

Most Asian stock markets dropped the first week in November, as Greece's plan to hold a referendum on its newly crafted bailout package rattled investors, sending the Tokyo market to a three-week low and denting oil prices. European stock markets have also dropped, as concerns persist about Greece's decision to hold a referendum on last month's eurozone bailout deal. European futures pointed to a rebound, after some indexes dropped more than 5% on November 2nd, and while several markets managed to recoup losses they have since plummeted back to lows nearing or exceeding November lows.

Asian stocks have continued to tumble this week with Japan's Nikkei 225 index down nearly 3% to 8,500 on Thursday afternoon. Hong Kong's Hang Seng dropped over 5%, South Korea's Kospi index sank 5% during the trading day Thursday, and Australia's S&P/ASX 200 index lost 3.2% in the first hour of trading. Benchmarks in mainland China, Taiwan, Indonesia, Thailand and Malaysia have also fallen. Analyst Michael Chung from ChanPark expects that exchanges in Hong Kong, Singapore and Shanghai will recover the day’s losses more quickly than Japan, South Korea and Australia, but according to Chung, the possibility of financial contagion is spreading across the continent rattling banking stocks. Japan's Mitsubish UFJ Financial Group (NYSE:MTU) has plummeted this week to falling to $4.20 at Wednesday’s close, 10% down from its October high. Industrial & Commercial Bank of China (601398.SS), the world's largest bank by assets, slid 2.75% by mid-day Thursday, and Australia & New Zealand Banking Group (ANZ.AX) fell nearly 6%.

After last month's impressive global rally in the wake of a European plan to tackle its debilitating debt crisis traders have grown concerned about the lack of detail. News that embattled Greek Premier George Papandreou's plan for a referendum on the country's latest bailout package had been unanimously passed by the Greek Cabinet earlier in the global day also helped prop markets. Despite the concerns about Greece, the euro has made steady progress against the dollar since its Halloween plummet. Analysts are saying the euro is likely to remain on edge, as worries over Mr Papandreou’s proposed referendum will probably persist for some time. A top European official warned that Athens could be left to go bankrupt if it went through with the vote and experts said the broader deal, which hopes to protect larger countries such as Italy from markets panic and was agreed to only last month, could collapse. Ultimately, Greece could leave the 17-nation euro currency union, causing financial havoc and pushing the global economy back into recession. That prospect could be enough to keep the referendum from happening — Papandreou's government could collapse before the proposal goes through, having lost huge amounts of support from its own party.

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