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Asian markets were flat yesterday as worries over Spain replaced the euphoria over Greece's breakthrough in resolving the political impasse.
The Hang Seng Index edged down 11.14 points, or 0.06 per cent, to close at 19,416.67, while the Shanghai Composite Index slid 0.66 per cent to close at 2,300.80.
Elsewhere in the region, Japan's Nikkei 225 dropped 0.75 per cent to 8,655.87 while Korea's Kospi closed up just 0.06 points to 1,891.77.
Traders said the optimism that set Asian markets on a bull run on Monday paled yesterday in light of the lingering crisis in Spain. 
The country's short-term borrowing costs rose to their highest level since 1997 in a debt sale.
Spain succeeded in raising Euro3.04 billion (HK$29.8 billion), much more than it was targeting, but had to pay a whopping 5.074 per cent for 12-month debt and 5.107 per cent for 18-month debt. 
Yields on 10-year bonds, meanwhile, hovered over an unsustainable 7 per cent. 
Three other euro-zone countries - Greece, Portugal and Ireland - were forced to ask for bailout funds when interest rates on their government bond had shot over 7 per cent.
The mainboard turnover of the Hong Kong stock exchange only reached HK$42.42 billion yesterday. Average daily turnover on the Hong Kong stock exchange for the first five months of this year was about HK$59.1 billion, down 21 per cent from the same period last year.
Frederic Lamotte, the chief investment officer of the private banking division of Credit Agricole Group, the largest retail banking group in France and the second-largest in Europe, said the bank would recommend investors to allocate half of their assets in stocks, 30 per cent in bonds and 6 per cent in commodities. 
In equities, he said, one-third should be invested in emerging markets, a third in the US, and a third in Europe, particularly German and Swiss companies.
While acknowledging the growth opportunities in Asia, Lamotte said it was time for bottom-fishing in the US and European markets, where cash-rich, quality stocks were going for attractive prices.
In a research report yesterday, HSBC said the Greek election results would lead to a short-term spike in sentiment in the equity market but longer-term investors would continue to grapple with the macro uncertainties emanating from the euro zone.
Lamotte said he saw no immediate pressure for the US Federal Reserve to launch another round of quantitative easing, but added the United States was actually in 'much worse shape' than Europe. 
Lamotte compared the US to a 'naked man with the torch' in a dark room laughing at the other guy, Europe, who is barely clothed. 
He said: 'If someone is to switch on the light, who will you laugh at?' 
Recent economic data from the United States, including a higher-than-expected jobless rate, underscores the slow economic recovery in the US.
7% 
The yield on Spanish 10-year bonds•Greece, Portugal and Ireland were forced to ask for a bailout when rates reached this level



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HSBC

Asian markets flat as Spain worries rise