Tokyo, Japan (BBN)-Shares in Asia opened lower on Monday in the first market reaction to Greece’s decision to close its banks and impose capital controls limiting the amount of money which can be withdrawn.

Japan’s Nikkei 225 index was down 1.81 per cent at 20,331.57 in mid-morning trade, reports BBC.

In Australia, the benchmark S&P/ASX 200 was down 1.85 per cent at 5,444.40 points.

In China, the main benchmark index opened up almost 1 per cent before making a dramatic reversal.

The Shanghai Composite continued to trade erratically for much of the morning. It was down 1.66 per cent at 4,118.30 points in mid-morning trade.

While in Hong Kong, the Hang Seng index was down 1.73 per cent at 26,206.84 after closing down 1.8 per cent on Friday.

Greece is due to make a €1.6bn ($1.75bn; £1.1bn) payment to the International Monetary Fund (IMF) on Tuesday.

But the country’s current bailout expires on the same day and the European Central Bank (ECB) has said that it will not increase emergency funding.

Economist Daniel Martin from Capital Economics told the BBC the current situation was “the closest Greece had come to exiting the eurozone” and that it would likely be a bad week for Asian markets.

Greek banks are expected to stay shut until 7 July, two days after Greece’s planned referendum on the terms it had been offered by international creditors for receiving fresh bailout money.

The Athens stock exchange will also be closed on Monday.

JAPAN NUMBERS

Shares in Japan were down despite official numbers showing retail sales grew 1.7 per cent in May from a month earlier – the fastest rate of growth since September last year.

Other official data showed industrial production in Japan missed forecasts though, falling 4 per cent in May from a year earlier.

“The plunge in industrial production in May points to a contraction in GDP (gross domestic product) this quarter,” economist Marcel Thieliant from Capital Economics said in a note.

“[This] corroborates our view that the Bank of Japan will have to step up the pace of easing before too long,” he added.

Meanwhile, South Korean shares were also down, with the benchmark Kospi down 1.55 per cent at 2,057.92 after ending four consecutive weeks of losses last week.

CHINA’S RATE CUT

On Saturday, China’s central bank cut its one-year lending rate by 25 basis points to 4.85 per cent. It is the bank’s fourth cut since November. It also lowered the amount of cash that some banks must hold as reserves by 50 basis points.

Analysts said the moves highlight Beijing’s concerns that money isn’t flowing to some of the most-needed sectors in the economy. Others said the bank had reacted to Friday’s share plunge which saw the Shanghai Composite close down more than 7 per cent.

Chinese investment holding company, Legend Holdings, made its trading debut in Hong Kong after raising more than $1.9bn in its initial share offering. The firm has a wide range of interests including in IT, agriculture and real estate and is the parent company of Lenovo.

BBN/SK/AD