By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) -- Asia stocks reacted badly on Monday to
plans for an unprecedented levy on private bank deposits in Cyprus
in exchange for a financial bailout -- with U.S. stock-index
futures and the euro also sharply lower.
Japan's Nikkei Stock Average tumbled to end 2.7% lower, while
South Korea's Kospi lost 0.8%, and Australia's S&P/ASX 200
index closed 2.1% lower.
In Chinese trading, Hong Kong's Hang Seng Index was down 2.1% in
the afternoon session, while the Shanghai Composite Index sat 1.1%
lower.
U.S. index futures also took a hit, as the Dow Jones Industrial
Average (DJI) contract traded down 159 points, or 1.1%, and Nasdaq
(RIXF) futures fell 41 points, or 1.5%, while those for the S&P
500 (SPX) lost 23.7 points, also a 1.5% loss.
In the currency markets, the euro (EURUSD) fell sharply to
$1.2894 in Asian trading hours Monday, down from $1.3076 in late
North American trading Friday.
The losses for Asian stocks and other securities came after
Cyprus announced plans for a one-off levy on bank deposits in
exchange for equity in the banks.
The measure was part of a deal that would have international
creditors provide 10 billion euros ($12.9 billion) to shore up the
island nation's finances.
The move would mark the first time in the euro-zone debt crisis
that private citizens' bank deposits would be tapped, and Morgan
Stanley said the introduction of the levy "seems to have broken
another taboo."
The strategists went on to question whether "senior bank debt is
the next taboo to be broken, given the linkage with deposits."
Morgan Stanley recommended selling high-beta banks and said
that, broadly, "investors should expect material market weakness in
the near term." ((Read more analyst reaction to the Cyprus deposit
levy:
http://blogs.marketwatch.com/thetell/2013/03/17/cyprus-deposit-levy-shakes-up-markets/.))
Asia movers
In Hong Kong, the Hang Seng Index's top-weighted component --
London-based HSBC Holdings PLC (HBC)(HBC)-- fell 2.6%, with the
Financial Times also reporting that the bank is planning "thousands
more job cuts."
Other Hong Kong-listed financial shares also showed weakness,
with Agricultural Bank of China Ltd. (ACGBF) down 3.2%, China
Merchants Bank Co. (600036.SH) off 2% and broker Haitong Securities
Co. losing 2.6%.
The volatile property sector also fell n Hong Kong, with New
World Development Co. (NDVLF) losing 3.5%, and China Overseas Land
& Investment Ltd. (0688.HK) down 2.6%.
Property shares were also reacting to fresh data, with TD
Securities strategist Annette Beacher saying that "while all eyes
are on the fallout of the proposed Cyprus bailout, the 70 city
property prices for China were released for February, and it was a
very strong report."
"An assortment of property price and lending controls has been
announced in recent weeks, and today's strong report confirms why
there has been some urgency in cooling this sector," she said.
With the Cyprus news weighing on global markets, the Japanese
yen (USDJPY) regained some safe-haven interest, sending the U.S.
dollar back down to Yen94.40 from Yen95.96 late Friday.
Amid a rising yen and worries of another flare-up in the
European debt crisis, Sony Corp. (SNE) fell 6.8%, Tokyo Electron
Ltd. (TOELY) dropped 5.3%, Toyota Motor Corp. (TM) lost 3.4%, and
Mitsubishi Motors Corp. (MMTOY) retreated 4.6%.
However, Panasonic Corp. (PC) managed to rise 0.6% after a
Nikkei news report said the company was considering closing its
plasma-television operations.
Gold futures rose Monday in Asia, but copper fell sharply along
with some other base metals, helping to make Australian mining
stocks among the worst performers in Sydney on Monday.
Among the majors, Rio Tinto Ltd (RIO) dropped 2.9%, while BHP
Billition Ltd. (BHP) fell 2.4%.
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