China shares hovered near bear-market territory in Friday morning trading, extending an early-year selloff. The S&P/ASX 200 XJO, -0.34% was down 0.3%.
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SHANGHAI Chinese shares tumbled again on Friday, with the Shanghai index closing lower than at any time since December 2014, leaving most who put their faith in Beijing’s measures to end last summer’s crash nursing losses. China’s latest monetary and credit data showed that small and medium-sized enterprises in China face problems getting loans from Chinese banks, despite Beijing’s efforts to boost the country’s private sector, analysts said.
The Chinese stock exchange saw massive sell-offs Friday afternoon following a report that some banks in Shanghai have halted accepting shares of smaller listed companies as collateral for loans, and persistent investor concerns over volatility in the yuan.
Meanwhile, the Hong Kong dollar, which is pegged to the USA dollar, fell to as weak as 7.7987 to one United States dollar.
After two weeks of selling that drove the Shanghai index down 18 per cent, investors said they would look for answers at a routine weekly briefing by China’s stock regulator to be held later Friday.
China’s yuan steadied on Friday as fears of a market meltdown faded thanks to central bank support for the currency during the week, though Chinese shares dropped after weaker-then-expected bank lending data and falling oil prices unsettled markets. Brent crude fell 2.2% to $30.19 per barrel and West Texas Intermediate dropped 3.5% to $30.12 per barrel at 0905 GMT.
The People’s Bank of China (or PBoC) again surprised the market on January 7 by setting the official midpoint rate on the yuan, also known as the renminbi, at 6.6 per dollar, the lowest since March 2011.
“Sentiment on the yuan has to stabilize before we see stability returning to the equity market”, said Ronald Wan, chief executive at Partners Capital International in Hong Kong.
The yuan strengthened 0.1 per cent against the USA dollar this week in Shanghai to 6.5870, after sliding 1.5 per cent in the five days through Jan 8. That compares with a drop of 2.21 trillion yuan for the whole of a year ago and is similar to the US$107.9 billion (S$155 billion) slide in the nation’s foreign exchange reserves that was previously reported for December. The currency had fallen as much as 1 per cent on Thursday after news of explosions in the Southeast Asian country’s capital city of Jakarta, although it recovered slightly after suspected government intervention following a rate cut by the central bank. 85 to one U.S. dollar.
CURRENCIES: The dollar rose to 118.16 yen from 117.89 yen in the previous trading session.
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Gold prices were up 0.4 per cent to $US1,078 a troy ounce.
