HONG KONG (MarketWatch) — Most Asian stocks rallied Monday on hopes Greece will remain in the euro-zone after weekend election results showing a narrow win for a pro-bailout party, although analysts cautioned the advance may be short-lived.
Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO -1.73% jumped 2%, while Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -2.53% , South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.47% and Taiwan’s Taiex each gained 1.8%.
China’s Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -0.57% rose 0.4%, while Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -2.67% closed up 1%, with both ending off the day’s peak.
The Sensex /zigman2/quotes/210597966/delayed IN:1 -2.87% failed to follow the regional benchmarks, declining 1.5% in afternoon trading in Mumbai, after the Reserve Bank of India left its lending rates unchanged at 8%, disappointing investors many of whom had expected a 0.25 percentage point rate cut.
Pro-bailout New Democracy ahead in Greek polls
The latest projections from the Greek election give the conservatives, New Democracy, a slim lead over Syriza, the radical left coalition. The figures suggest a coalition government could be formed by mainstream parties.
“The apparent victory of pro-bailout parties in Greek elections serves as material for at least a temporary relief rally,” said Naomi Fink, head of strategy at Jefferies Japan. Still, she added that “event risk” remains elevated for markets ahead of the Group of 20 and Federal Open Market Committee meetings this week.
The broad regional gains came as early results from the weekend parliamentary elections in Greece projected the New Democracy party would win and form a coalition government that is expected to honor the country’s commitments when it received a financial bailout.
The lead-up to the Greek poll and worries about the future of the euro zone had created waves of anxiety across global markets in recent weeks.
The result represented a slim victory over the anti-austerity Syriza party, which had vowed to tear up the terms of Greece’s bailout. Read more on the Greek elections.
BNP Paribas strategists said that while the near-term prospect of a Greek exit from the monetary union had diminished, “uncertainty is likely to remain high once the new government is sworn in.”
“A renegotiation of the Troika [funding] program is likely, but it will probably imply some official debt forbearance and won’t be plain sailing,” the strategists said. Troika refers to the European Union, European Central Bank and International Monetary Fund.
Stocks in the financial, resource and export sectors were among the notable gainers.
Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 -1.93% jumped 4.2%, Mazda Motor Corp. /zigman2/quotes/204777714/delayed JP:7261 -2.67% /zigman2/quotes/206326885/delayed MZDAY -7.13% spiked 6% and Nomura Holdings Inc. /zigman2/quotes/201003564/delayed NRSCF +0.88% /zigman2/quotes/206251373/delayed JP:8604 -2.01% /zigman2/quotes/207276383/composite NMR -0.94% rose 2.6% in Tokyo; in Sydney, investment bank Macquarie Group Ltd. /zigman2/quotes/206727308/delayed AU:MQG -3.22% /zigman2/quotes/209628452/delayed MQBKY -4.88% put on 2.6% and mining giants BHP Billiton Ltd. /zigman2/quotes/208108397/composite BHP -1.89% /zigman2/quotes/201448516/delayed AU:BHP -1.53% and Rio Tinto Ltd. /zigman2/quotes/202627887/composite RIO -2.23% /zigman2/quotes/200083756/delayed AU:RIO -2.25% gained 2.5% and 4.6%, respectively.
Hyundai Motor Co. /zigman2/quotes/204364212/delayed HYMTF -3.76% rose 3.5% and Samsung Securities Co. climbed 2.4% in Seoul; in Hong Kong, energy producer Cnooc Ltd. /zigman2/quotes/203421416/delayed HK:883 -2.14% gained 2.1% and Standard Chartered PLC /zigman2/quotes/208435361/delayed SCBFF -10.42% /zigman2/quotes/202369078/delayed HK:2888 -4.96% added 2.3%.
Chinese property developers performed well on mainland bourses as well as in Hong Kong on an improvement in risk-appetite and after data showing May property price data showed a smaller decline in housing prices.
Shimao Property Holdings Ltd. /zigman2/quotes/208719072/delayed HK:813 -5.06% /zigman2/quotes/205755400/delayed SIOPF +12.71% gained 3.2% and China Overseas Land & Investment Ltd. /zigman2/quotes/205731176/delayed HK:688 -1.80% /zigman2/quotes/202573805/delayed CAOVY -0.17% gained 2.7% in Hong Kong, Poly Real Estate Group Co. /zigman2/quotes/201864015/delayed CN:600048 -1.40% added 1.7% in Shanghai, and China Vanke Co. rose 0.9% in Shenzhen.
Among other movers, bourse operator Hong Kong Exchanges & Clearing Ltd. /zigman2/quotes/200234512/delayed HK:388 -1.36% /zigman2/quotes/201215503/delayed HKXCY -1.71% slumped 4.5% after it announced Friday the acquisition of London Metal Exchange, with some analysts concerned over the deal’s price tag of $2.2 billion. Read more on HKEx’s deal to purchase of LME.
Shares of Lynas Corp. /zigman2/quotes/202074955/delayed AU:LYC -3.43% surged 6.3% after the Australian rare-earths miner said it is able to meet new conditions imposed on a temporary licence it’s seeking to operate a refinery in Malaysia.
Shares of Fairfax Media Ltd. soared 7.4%, after the firm said it would cut 1,900 jobs over the next three years and shift its flagship broadsheet newspapers to tabloid format, in a push to become a digital-media company.
Stocks in India retreated after the RBI left its benchmark lending rate unchanged at 8%, citing concerns about inflation.
Shares of ICICI Bank Ltd. /zigman2/quotes/204318043/delayed IN:532174 -3.86% /zigman2/quotes/208917098/composite IBN -4.90% dropped 4%, HDFC Bank Ltd. /zigman2/quotes/205450032/delayed IN:500180 -2.24% /zigman2/quotes/205576242/composite HDB -3.63% gave up 3% and property major DLF Ltd. /zigman2/quotes/203573600/delayed IN:532868 -7.53% sank 4.9% in afternoon trading.