HONG KONG (MarketWatch) — Asian markets mostly rose Tuesday after Greece’s creditors agreed to extend more financial aid to the debt-struck country, with Tokyo shares ending at a seven-month high, while stocks in Shanghai fell to near four-year lows.
The broad gains came after euro-zone finance ministers, the European Central Bank and the International Monetary Fund all agreed early Tuesday in Brussels to disburse bailout funds to Greece. The IMF said the initiatives include debt buybacks and a reduction on some interest payments by Greece.
“Taken together, these measures will help to bring back Greece’s debt ratio to a sustainable path and facilitate a gradual return to market financing,” IMF Managing Director Christine Lagarde said in a statement. Read: Euro zone, IMF agree on Greece debt deal.
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Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.71% climbed 0.4%, its best level since late April, after opening slightly lower.
South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.39% advanced 0.9%, Taiwan’s Taiex added 0.3%, and Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO +1.16% rose 0.7%.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.59% slipped 0.1% after a choppy afternoon session, while China’s Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 +0.78% dropped 1.3% to 1,991.17, its lowest finish since January 2009. The Shenzhen Composite Index, meanwhile, tumbled 3% to 765.52, a closing level it hasn’t seen since March 2009.
The Shanghai benchmark had rebounded sharply to end higher last Wednesday, after it briefly slipped below the psychologically-important 2,000-point level, with some traders interpreting that day’s recovery as a sign that Chinese authorities were watching the equity markets closely and would provide support.
Tuesday’s drop in Shanghai came even as data released by the National Bureau of Statistics showed industrial profits jumped 20.5% in October from the year-ago period, much stronger than the 7.8% increase in September, and reaffirming an improvement in macro-economic conditions. Read full story on the monthly data on industrial profits.
The improvement in October profits was driven in part by a fall in commodity prices, as well as due to a softer statistical base in the year-earlier period, said Ting Lu, China economist at Bank of America Merrill Lynch. “Going forward, we expect the street to turn more positive on short-term economic and earnings growth,” he said.
But some were downbeat about the trajectory for corporate profits in China.
“We forecast profits falling below 10% of gross domestic product in 2012, which would put them back at their 2007 ratio. We expect ... the ratio [to] fall to its pre-World Trade Organization accession level of 4% to 5% over the next few years,” Tim Condon, a Singapore-based economist at ING Financial Markets, wrote in a note before Tuesday’s corporate profit data.
Several chemical and pharmaceutical stocks lost ground in Shanghai, with Harbin Pharmaceutical Group Co. /zigman2/quotes/202194507/delayed CN:600664 +0.27% down 5.6% and Zhejiang Xinan Chemical Industrial Group Co. /zigman2/quotes/200320522/delayed CN:600596 +1.45% dropping 8.8%.
Shares of Jiugui Liquor Co. /zigman2/quotes/208562570/delayed CN:000799 +0.97% plunged by the day’s 10% limit in Shenzhen, after excessive levels of a toxic chemical were found in a baijiu brand of the company recently. State-owned news service Xinhua cited media reports as saying the company would suspend production for equipment upgrades.
The weakness in Shanghai contrasted with broad gains across the region after the Eurogroup deal on Greece debt-reduction targets.
And while the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.14% dropped overnight amid concerns over the fiscal cliff, U.S. equity futures advanced in Asian trading hours Tuesday, with Dow industrials futures rising 19 points, or 0.2%, to 12,955. Read: U.S. stock indexes retreat on ‘cliff’ worries.
The dollar moved lower after news of the Greek deal broke, with the U.S. unit /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0845% trading at 82.17 yen by late afternoon in Tokyo Tuesday, unmoved the level seen in late North American action Monday.