The spread between the onshore and offshore yuan hit its widest level in more than four years on Tuesday after the central bank was suspected to have intervened in the onshore market to support the currency.
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The Shanghai Composite was down almost 2 percent in afternoon trading, while the Shenzhen Composite shed 3.1 percent.
Monday’s 7% fall in China spooked global markets. Global stocks plunged on Monday, with the Dow making its worst start to a year since 2008, after weak factory data out of China and the United States.
The broader Topix dropped 0.3 percent to 1,504.71 and the JPX-Nikkei Index 400 declined 0.4 percent to 13,547.19.
Hong Kong’s Hang Seng index also fluctuated through the day, and ended 0.7% lower at 21,188.72.
The retailer saw shares drop 5% after revealing that full-price sales fell 0.5% across its stores in the 60 days to December 24, while sales across its Next Directory online and catalogue arm lifted 2%.
Shares of Japanese electronics maker Sharp fell 3.3% after reports that the troubled firm is expected to book an operating loss of at least 10bn yen ($84m; £57m) for the nine months to December.
That was the first time a new “circuit breaker” system – created to curb volatility in Chinese stock markets – has been triggered, with trading ending 90 minutes earlier than the usual close. On Tuesday, the selling in Shanghai abated, likely helped by a reported liquidity injection by the People’s Bank of China. The country’s main stock market in Shanghai actually halted trading after stocks fell 7%.
The market is anticipating more yuan weakness in 2016, based on the slowing growth of the world’s second-largest economy and divergence in the value of the yuan onshore and offshore. “I see 2016 being a year of flat to declining USA stocks because there are no catalysts to raise prices”, said Mohannad Aama, managing director, Beam Capital Management in NY.
Tensions in the Middle East have also caused concern, in particular the nosedive in relations between Saudi Arabia and Iran.
Trader Tommy Kalikas, center, works on the floor of the New York Stock Exchange, Monday, Jan. 4.
1 percent and Frankfurt rose 0.
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Twitter lost 2.8 per cent following a report that it is considering messages as long as 10,000 characters, much above the current 140-character limit.
