Chinese investors monitor stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016.
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After the rout, Chinese authorities suspended the new trading “circuit breakers” that are meant to damp panic but which many market-watchers argue sowed more panic, according to China’s official Xinhua news agency.
The story isn’t about Chinese stock markets, it’s more about the Chinese economy as a whole.
The government said the USA added 292,000 jobs in December, easily beating expectations. At the start of the day, trading was halted after less than 30 minutes when stocks plunged by more than 7% – the second time the circuit-breaker was triggered since its introduction this week.
HONG KONG (AP) – Calm returned Friday to China’s stock markets after a torrid week but underlying reasons for the turmoil remain: a weakening yuan and perceptions China’s leaders are bungling their handling of the economy.
The pan-European FTSEurofirst 300 index and the eurozone’s blue-chip Euro STOXX 50 index were down 2.4 per cent and 1.8 per cent respectively. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, added 1.05 percent to 1,978 on turnover of 437.4 billion yuan ($66.4 billion or 61 billion euros).
European markets also fell. The FTSE 100 index of leading British shares declined 0.7 percent while Germany’s DAX lost 1.3 percent.
To allay concerns about massive new initial public offerings draining market liquidity, Deng said the launch of the much-anticipated registration-based IPO system will not occur on March 1 as previously reported. Japan’s Nikkei 225 lost 0.4 per cent to 17,697.96 and Australia’s S&P/ASX 200 shed 0.4 per cent to 4,990.80. Stocks rose in Taiwan and were mixed in south-east Asia.
Asian shares rebounded on Friday, led by strong gains for beaten Chinese stocks after China suspended its market circuit breaker and set a stronger midpoint rate for trading of the yuan for the first time in nine days.
The gains pared losses for the week for both indexes to less than 10 percent.
The People’s Bank of China has allowed the yuan to decline gradually since August after loosening its tie to the dollar. The manufacturing sector has recorded another consecutive contraction, the yuan has plunged to a five-year low against the USA dollar and most major fundamental indicators show weakness.
While China’s high concentration of individual investors makes its stock-market notoriously volatile, the extreme swings this year have revived concerns over the ruling Communist Party’s ability to manage an economy set to grow at the weakest pace since 1990.
“We suspect this is poor communication by the People’s Bank rather than a deliberate devaluation”, said David Rees of Capital Economics in a report.
Worries about China have been driven by a decline in the value of the yuan and disappointing economic data. Those fears have drowned out signs that the United States and Europe are doing fairly well. US WTI futures were trading up 2.1% at $34.46 per barrel, as off 2:41 AM EST against yesterday’s level of $33.27 per barrel.
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In commodities Brent crude settled down 48 cents at $33.75 on Thursday, after sliding to a low of $32.16, a level last seen in April 2004.
