In Hong Kong, the Hang Seng index was also pulled lower, closing down 1.8% at 22,757.47. The People’s Bank of China (PBOC) devalued the currency on August 11, within a few days of the poor July export data and other official figures showing factory-gate prices continued their three-year slide in July, touching a six-year low. Adding to a series of steps by the government to halt the crash, the world’s second largest economy devaluated its currency.
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“We have been conditioned to buying on the dip”, said Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than US$1 trillion. Wall Street looked set for losses at the open too with Dow futures and the broader S&P 500 futures down 0.7 percent.
ANALYST VIEW: “The Fed appears to be heading toward a rate hike and this against the backdrop of deflationary forces globally is creating intense uncertainty”, Shane Oliver, head of investment and chief economist at AMP Capital, said in a commentary. “Short-term sentiment is pretty weak”.
But losses returned this week after comments by China’s securities regulator sparked fears that authorities would withdraw support measures, sending the Shanghai Composite tumbling 6 percent on Tuesday and 5 percent on Wednesday. The slump threatens to undermine confidence in President Xi Jinping’s ability to manage the economy.
CHINA JITTERS: In China, a preliminary version of a gauge of business activity, the Caixin purchasing managers’ index, fell to an unexpectedly low 47.1 points. A figure above 50 indicates growth, while anything below signals contraction. “That is worrying for global economy”.
The Hang Seng China Enterprises Index of mainland shares listed in the city lost 2 per cent, while the Hang Seng Properties Index posted a 13th daily drop, the longest stretch on record, raising concern the city’s real estate market is overvalued.
“Investors are also scared that after many companies revealed the share stake holdings of the “national team”… there won’t be any more moves left, since the state has already bought so much stock”, Chen said. Natural gas dropped by half a cent to $2.71 per thousand cubic feet. Shares were also down in Hong Kong, Seoul, Sydney, Singapore, Taiwan, Bangkok and Jakarta.
The outstanding balance of margin debt on the Shanghai Stock Exchange fell by 0.7 per cent to 869.2 billion yuan on Thursday. However, as the weak import numbers suggest, demand within the country was yet to pick up.
China stocks witnessed wild swings on Wednesday following a 6 per cent plunge in the previous session, as experts warned that it wouldn’t be an easy return to good times for the market.
A fresh sell-off of Chinese shares prompted renewed jitters across global markets on Thursday. The ratio was 68 at the peak of China’s equity bubble in 2007, according to data compiled by Bloomberg.
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More than 62 per cent of companies in the Shanghai Composite trailed analysts’ 2014 earnings estimates as the economy expanded at its weakest pace since 1990.
