Asian Shares Fall After Greek Vote

Asian stocks fell early Monday after Greeks refused creditors' terms for a bailout, potentially setting the stage for its exit from the eurozone.

Investors are bracing for a bumpy day of trading, after preliminary results of Greece's referendum Sunday show a victory for the "no" campaign, which rejected austerity policies set out by the eurozone and the International Monetary Fund. Creditors have said the outcome imperils future compromise and puts Greece closer to leaving the currency bloc.

"The negative vote was not entirely unexpected, but it sends Greece's trajectory closer to a eurozone exit, which would be unprecedented," says Rakuten Securities senior market analyst Masayuki Doshida.

Japan's Nikkei 225 Stock Average shed 1.3% in early trading while Australia's S&P/ASX 200 was down 1.6%. South Korea's Kospi was down 0.9%.

"Much of the trauma generated by Greece's situation was priced into the market last Monday," says Kenichi Hirano, CEO at Tokyo-based K Asset Management, referring to the day the Nikkei suffered its second-worst percentage fall of the year. "The impact on Japan should be more limited this time,

Earlier Monday, euro sank 0.9% to $1.1017 against the U.S. dollar and fell 1.1% against the Japanese yen as investors sought safer assets. The yen also rose 0.3% against the dollar. Gold prices rose 0.8% to $1,172.20 per troy ounce, while Brent crude futures dropped 1.1% to $59.69.

Investors also will assess Beijing's cranked up efforts over the weekend to stem a three-week selloff in Chinese shares that has wiped out about $2.4 trillion in value. China's central bank indirectly will help investors borrow to buy shares and regulators agreed to halt all new initial public offerings.

Late Sunday, the top securities regulator said the People's Bank of China would "provide liquidity assistance" to China Securities Finance Corp., a company owned by the stock regulator. The company will use the money to lend to brokerages, which could then make loans to investors to buy stocks. It marks the first time central-bank funds will be directed to institutions other than banks.

Earlier in the weekend, China's big state-controlled securities firms, mutual funds and a unit of China's giant sovereign-wealth fund also pledged to buy shares. The Securities Association said that 21 brokerages pledged to try to increase investments in the stock market as long as the Shanghai Composite Index stays below 4,500.

"If China does not find support today, the disorder could be monstrous," analysts from brokerage IG wrote.

Still, other brokerages are more hopeful. Regulators have more options at hand to stabilize the Chinese market, and the unwinding of margin positions could encourage more risk taking in future, said HSBC.

"The regulator is committed to prevent further A-share sharp falls. And more favorable policies are expected to be rolled out to stabilize the market if volatility remains high," analysts from the bank wrote in a research report. "We estimate that the worst of deleveraging and forced selling in the A-share market could be behind us."

--Bradford Frischkorn contributed to this article.

Write to Gregor Stuart Hunter at [e-mail]

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