The CSI Index tracking some of the largest-cap stocks in Shanghai and Shenzhen tumbled 2.6 percent to 2,853.76. A 13% loss in USA oil prices this year has raised questions about the outlook for already low inflation and added a sense of general uncertainty in markets.
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China’s central bank has jolted global financial markets twice in six months by allowing sharp, sudden slides in the currency, only to step in aggressively to stabilise it and deter speculation. The contract fell $1.85, or 5.7 percent, to $30.34 a barrel in NY on Monday.
Even China’s share ownership isn’t widespread, the bear market has complicated Beijing’s effort to transfer its economy away from investment and exports to a more sustainable growth which led by consumption. He expects another 10 percent drop or more in Shanghai shares before things settle down.
Huang, whose timely bets on the direction of share prices propelled his Yourong Fund to the top of the country’s performance rankings, advised investors to sell shares as the stock market could come under pressure this year from both the economic slowdown and a potential surge in the supply of new shares.
Billionaire investor George Soros is betting against Asian currencies in a big way and China is pissed, calling his actions nothing short of a declaration of war against its economy.
Huang Weimin, whose Chinese stock index futures wagers returned more than 6,200% last year, said the Shanghai gauge could decline another 15% in the first half of the year as slowing economic growth and a weaker yuan spurred capital flight.
The U.S. Federal Reserve left interest rates unchanged late on Wednesday and said it was keeping a wary eye on global markets and their impact on the labor market and inflation, but didn’t signal it was ready to abandon its plan to tighten monetary policy this year.
China’s central bank has pledged to keep the yuan basically stable against a basket of currencies while Hong Kong’s central bank has said it had no plans to change the Hong Kong dollar’s peg to the USA dollar, despite recent market volatility. The Chinese central bank has been injecting cash to prevent a shortage ahead of the Lunar New Year, a time when demand for funds rises.
“Last year, a record $1 trillion flowed out of China, according to data from Bloomberg Intelligence”.
London’s FTSE 100 index was off 1.5 per cent early, with BHP Billiton and Rio Tinto down 1.2 per cent and oil stocks such as BP and Royal Dutch Shell losing more than 2 per cent.
The other Asian markets also decreased on Tuesday.
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The stock market moves in China have stoked concern about the health of the world’s second-largest economy, as well as consumer confidence, hitting many stocks exposed to the country’s market.
