The euro slipped and Asian stocks tumbled in thin trading yesterday due to doubts about an enormous European bailout hammered out at the weekend to avert a crippling debt default by Greece.
Australian stocks also suffered after the government announced plans for an extraordinary tax on massive profits at mining companies, while fresh measures to curb red-hot property lending in China weighed on Hong Kong.
RESCUE
The EU and the IMF on Sunday endorsed the 110 billion euro (US$145.6 billion) rescue package, which is conditional on a swathe of painful cuts and tax rises by Greece.
However, the bailout must now pass through eurozone member parliaments, including that of Germany, where public resistance to the rescue package runs deep and where a major state election is due on Sunday.
“We still need the German parliament to approve [the bailout] and the other issue is the German election,” said Philip Wee, a senior currency economist with DBS Group Research in Singapore.
The euro rallied last week in anticipation of the bailout, but it is “still too early” to tell if the EU’s commitment will shore up the currency, Wee said.
The euro bought US$1.3239 at 0550 GMT in Asia, down from US$1.3294 late in New York on Friday, paring back early gains that saw it climb as high as US$1.3332.
“Although Greece has had a lifeline from the IMF ... the market is not assured that the worst has passed,” said Thio Chin Loo, a senior currency analyst with BNP Paribas in Singapore.
Athens was desperate to get the bailout agreed before it faces a critical debt repayment on May 19.
However, Greek unions vowed to battle the painful measures, which include deep cuts to wages and pensions, potentially doing further damage to the struggling economy.
PROPERTY BUBBLE
Hong Kong shares closed down 1.41 percent, or 297.23 points, at 20,811.36 a day after China ordered banks to increase the amount of money they must keep in reserve, as it tries to restrain new lending to avoid a damaging property bubble.
The People’s Bank of China hiked the reserve ratio for commercial banks by 50 basis points effective May 10 — its third increase since the beginning of the year.
The move raises the standard reserve ratio for major banks to 17 percent of deposits, though the rate can vary for each bank.
Mainland property companies and banks in Hong Kong were hit.
At the close of Hong Kong trade, China Construction Bank (中國建設銀行) and Industrial Commercial Bank of China (中國工商銀行) both dropped 1.6 percent, while among developers China Resources Land (華潤置地) dived 5.1 percent and China Overseas (中國海外集團) fell 3.8 percent.
Shanghai was closed yesterday for a public holiday, as was Tokyo.
Sydney ended 0.46 percent, or 21.9 points, lower at 4,785.5, as mining stocks were hit by news of Canberra’s 40 percent tax on extraordinary profits in the sector, which has boomed thanks to Asian demand led by China’s hectic growth.
BHP Billiton fell 2.99 percent to A$39.53 (US$36.60) and Rio Tinto fell 4.3 percent to A$69. Singapore slid 0.97 percent, in line with a weaker Wall Street.
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
PERSISTENT RUMORS: Nvidia’s CEO said the firm is not in talks to sell AI chips to China, but he would welcome a change in US policy barring the activity Nvidia Corp CEO Jensen Huang (黃仁勳) said his company is not in discussions to sell its Blackwell artificial intelligence (AI) chips to Chinese firms, waving off speculation it is trying to engineer a return to the world’s largest semiconductor market. Huang, who arrived in Taiwan yesterday ahead of meetings with longtime partner Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), took the opportunity to clarify recent comments about the US-China AI race. The Nvidia head caused a stir in an interview this week with the Financial Times, in which he was quoted as saying “China will win” the AI race. Huang yesterday said
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
RSS