BEIJING (AP) – Asian shares tumbled Monday after Italian voters’ rejected constitutional changes, raising questions over whether Italy will stay in the European Union and keep using the euro.
KEEPING SCORE: Sydney’s S&P-ASX 200 index dropped 1 percent to 5,391.40 points and the Shanghai Composite Index lost 0.9 percent to 3,215.30. Tokyo’s Nikkei 225 retreated 0.6 percent to 18,309.07 and Seoul’s Kospi shed 0.1 percent to 1,967.67. Benchmarks in Taiwan and New Zealand also declined. Hong Kong’s Hang Seng fell 0.4 percent to 22,484.24. Shares were mixed in Southeast Asia.
ITALY VOTES “NO”: Italian voters rejected proposed constitutional changes, delivering a stinging defeat to Premier Matteo Renzi and galvanizing the populist opposition. Renzi had said the changes, which would strengthen the administrative branch and reduce the powers of Italy’s Senate, were necessary to rejuvenate the economy. He announced his resignation. The rejection was a rebuke to industrialists, bankers and establishment institutions that supported the changes. It raises doubts about whether Italy will stay in the European Union and keep using the euro common currency.
ANALYST’S TAKE: “Risk sentiment has taken a hit from rejection of the Italian referendum,” Citigroup analysts said in a report. The outcome was in line with polls but the heavy margin of rejection is surprising,” they said. “Italy’s Prime Minister Renzi has resigned after accepting defeat in the referendum. This raises the political risks in Italy and may weigh on its troubled banking sector. This also casts significant doubts over Italy’s membership of the European Union and the future of Eurozone.”
TRUMP WATCH: Donald Trump rattled Beijing by taking a phone call from Taiwan’s president in a break with U.S. diplomatic protocol. China issued an unusually low-key complaint, saying it was a “small trick” by Taiwan, which the communist mainland claims as part of its territory. Washington has close ties with Taiwan but switched formal diplomatic relations to Beijing four decades ago. The call was the starkest example yet of how Trump has flouted diplomatic conventions since he won the Nov. 8 election. He apparently has been speaking with foreign leaders without guidance from the State Department, which oversees U.S. diplomacy.