“Sentiment on the yuan has to stabilise before we see stability returning to the equity market”, said Ronald Wan, chief executive at Partners Capital International in Hong Kong.
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Subsiding certainty in Mainland China’s administrative decisions has incited shareholders to panic and withdraw from the fiasco economy.
Offshore yuan liquidity was squeezed earlier in the week as a result of state-backed banks buying, at the central bank’s behest, to push overnight borrowing rates in Hong Kong to record highs, making it prohibitively expensive to bet against the yuan.
CHINA DATA: China’s exports rose 2.3 percent in December from a year earlier in yuan terms, reversing a 3.7 percent drop in November, the Finance Ministry reported. China’s yuan fell sharply in early trade in the offshore market Thursday, cutting into some of the gains the currency made earlier this week when the Chinese central bank intervened to prop up its value.
Imports collapsed not as much as had been predicted. A Bloomberg replica of a new yuan index composed of 13 currencies and published by the China Foreign Exchange Trade System rose 0.4 per cent this week, trimming this year’s loss to 0.9 per cent. Imports decreased 7.6 percent year on year, receding for 14th consecutive month, but improving from the previous month’s 8.7-percent drop.
On Wednesday, China’s share markets had appeared to take no comfort from December trade data that beat forecasts and tempered some of the fears about the slowdown in the world’s second-largest economy.
US DATA WATCH: Investors may get more insight into how the USA economy and Corporate America are doing on Friday.
China’s central bank, the People’s Bank of China, fixed the yuan higher against the United States dollar Thursday, after guiding it lower over the past two days, but the currency slipped during the day’s trade.
“Lending to the real economy remained strong at the end of a year ago, which should help support economic activity in the coming months”, Capital Economics said in a research note.
OIL: The price of crude oil fell again after a rebound in the previous session, hovering slightly above $30 a barrel. This contrasted with market expectations where a further retrenchment of 4.1% had been predicted.
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China imported a record amount of crude a year ago as oil’s lowest annual average price in more than a decade spurred stockpiling and increased demand from independent refiners. The yuan traded in the mainland market declined 4.4% in 2015, the most since 1994. Shenzhen’s start-up board rose 0.7 percent, bucking the broader trend.
