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.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
NEW MARKET: The partnership opens up India to the Dutch company, which already has a strong hold in the semiconductor market of South Korea, Taiwan and China ASML Holding NV entered into a partnership agreement with Tata Electronics Pvt Ltd aimed at ramping up India’s goal to develop domestic chip-manufacturing capabilities. The Dutch company’s technology would help power Tata Electronics’ planned 300 millimeter (mm) semiconductor foundry in Gujarat, according to a joint statement from the two companies on Saturday. The signing of a memorandum of understanding coincides with a visit by Indian Prime Minister Narendra Modi to the Netherlands, which is looking to deepen bilateral relations with New Delhi. ASML, whose top customers include Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co, makes lithography machines that can print
PORTFOLIO REBALANCING: The adjustments in three global equity indices reflect rising investor appetite for semiconductor and artificial intelligence-related stocks Taiwan’s weighting in major global equity indices compiled by MSCI Inc is to rise modestly following the latest quarterly review, underscoring the market’s expanding role in emerging-market portfolios, as global investors continue to favor the nation’s technology sector. Taiwan’s weighting in the MSCI Emerging Markets Index is to increase by 0.30 percentage points to 23.76 percent, after the changes take effect at the close of the May 29 session. Its weighting in the MSCI All-Country Asia ex-Japan Index is to rise 0.37 percentage points to 27.16 percent, while that in the MSCI All Country World Index is to edge up slightly to
The Hsinchu County Government’s Labor Affairs Department yesterday said that it has received a plan from cosmetics brand Taiwan Shiseido Co (台灣資生堂) detailing mass layoffs at its plant in Hukou Township (湖口). While the labor authorities did not disclose the number of employees to be laid off, Japanese news media earlier in the day reported that the closure of the company’s factory in Hukou would result in 170 employees losing their jobs. Shiseido followed the law by reporting its layoff plan, the department said, adding that authorities would closely monitor negotiations between the management and affected employees and step in if any
RSS