Asia braced for Greek fallout on markets, China to support stock trade

Investing.com - Asian policymakers in China and Japan and elsewhere on Monday braced for any fallout from the Greek 'No' vote at the weekend as Greece's Prime Minister, Alexis Tsipras said Sunday he wanted a quick deal with its creditors and to restore banking sector operations to avert a humanitarian crisis.

Tsipras said that the International Monetary Fund report, released Thursday, which said that the Greek debt was not sustainable, was proof that his government was right on the demand its restructuring.

Greece's Finance Minister, Yiannis Varoufakis, said Sunday that the 'No' vote in the referendum was the peoples' response to five years of austerity and added that creditors never had a real intention to cooperate.

"We had two requirements: to put an end to austerity and to restructure the debt," he said. "Unfortunately, the creditors refused any meaningful discussion and from the first moment planned to shut down our banks in order to impose their positions," he said to reporters.

"The Greek people today return this ultimatum back to the creditors. From tomorrow, with this No, we will extend a cooperation hand to our partners and call them one by one in order to reach common ground."

At the weekend, China announced the suspension of initial public offerings and corralled its leading brokerages to establish a RMB120 billion fund to support the country's battered stock market amid a flurry of weekend activity aimed at arresting the market's slide at the Monday open.

While the move is not a direct response to Greece, the move follows a near-30% plunge in the value of shares traded in Shanghai since its recent peak, including a 12% drop last week. Beijing has stepped up its interventions in the market after last weekend's rate and reserve cuts from the People's Bank of China failed to lift market sentiment and put a floor under prices.

Chinese regulators said late Sunday that the PBOC will provide liquidity support to state-owned margin finance firm China Securities Finance Corp while Central Huijin, the domestic investment arm of sovereign wealth fund China Investment Corp, said it has been buying ETFs in the market and will continue to do so.

Still, analysts don't believe the turmoil of recent weeks poses much direct threat to the Chinese financial system or to economic growth, but concern about the fallout from the Greece vote is a factor.

At the same time, Bank of Japan Governor Haruhiko Kuroda said the central bank and the government discussed Greece on Monday in Asia and has plans to closely watch the reactions of financial markets in tandem with other countries.