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Asian markets slump, fear euro zone austerity reversal

Sunday, May 06, 2012 - 02:09

May 7 - Asian markets tank after Greek and French voters reject austerity in favour of pro-growth candidates, calling into question Europe's austerity programs.

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Asian markets reacted to the Greek and French election results with a massive sell off of riskier assets. Investors are spooked by the possibility austerity programmes, seen as vital to fixing Europe's debt crisis, would be rolled back. Asia Pacific markets shed over two percent, with blue chip exporters and banks dragging Japan's Nikkei 225 to a 3-month low. Hong Kong's Hang Seng shed all of last weeks gains as financials and energy stocks nose-dived. With the two main pro-austerity parties losing their parliamentary majority, markets fear a Greek leadership crisis and an exit from the euro zone. But Asianomics MD Jim Walker says this may not necessarily be as bad as feared. (SOUNDBITE) (English) ASIANOMICS FOUNDING AND MANAGING DIRECTOR, JIM WALKER, SAYING: "The only thing that can save, or resuscitate countries like Greece and to a certain extent, countries like Spain and Portugal, is basically an exit from the euro zone, a default on debt, a devaluation of the currency, and that would bring a stimulation of economic activity and a return to growth. But the proposals as they stand just now, and the measures that have been put in place over the course of the last year, really won't stack up when it comes to reviving economic growth. This is just going to be, if they follow through, a depression for the years and years ahead." A victory in France for Francois Hollande is also calling into question euro zone leadership, which has been led over the past year by the partnership of Nicolas Sarkozy and German Chancellor Angela Merkel. Hollande swept to power on a pro-growth platform, while Merkel has pushed for strict fiscal policies in member states. Investors dumped the euro, but safe haven currencies like the Swiss franc and dollar rose to multi-week highs. Markets now await Chinese data due later this week, ranging from trade, to consumer prices and industrial output. Weaker data from the world's second-largest economy could further dent investor risk appetite. Arnold Gay, Reuters.

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Asian markets slump, fear euro zone austerity reversal

Sunday, May 06, 2012 - 02:09