Worldwide stock market fears

The Chinese government was reported to have pumped more liquidity into the market on Tuesday morning – Shanghai Securities News said it would inject as much as 150 billion yuan (around $23 billion). On the other hand, year-on-year increases were registered in the values of imports from the USA (+4.3%), Korea (+2.6%) and the Mainland (+1.6%).

Shanghai did it again, breaking another psychologically important level – 3,000 this time. That follows a drop of 8.5% drop on Monday, the worst single-day loss in more than eight years. Exports to these regions fell 4.3% and 10.1%, respectively. In Singapore the ST Index crashed 6.77% to 1,332.46.

“The market feels like it’s self-imploding because it’s used to a lot of hand holding”, said Steve Wang, director of research at brokerage Reorient Group.

Some analysts predicted more government intervention by the so-called “national team”, a description for entities, including the CSF, that are trading on behalf of the government.

“Today’s sharp correction is only the latest indication that all is not well with China’s economy”, said Philippe Espinasse, a former equity capital markets banker and author of IPO: A Global Guide.

Amid global market turmoil, Tokyo stocks showed volatile moves throughout Tuesday.

Many had expected China’s central bank, the People’s Bank of China (PBOC) to slash reserve ratios, the amount of deposited funds which banks must keep in reserve, thereby boosting liquidity. “The lack of clarity makes it hard to assess what is needed to stem the rout”, said Bernard Aw of IG Markets in a report.

Asia’s financial markets were hit hard by the declines in Chinese markets.

Sydney closed higher, adding up 2.72 percent or 136.02 points at 5,137.30, while Seoul rose 0.92 percent, or 16.82 points, at 1,846.63. PetroChina lost 4.90 per cent to 9.51 yuan while Sinopec dived 8.94 per cent to 4.99 yuan. “Investors realized it was overdone and that it may represent a decent buying opportunity”.

Banks led Australia’s S&P ASX 200 higher, with shares of Westpac Banking Corp. China Overseas collapsed 5.8 percent. China’s slowdown results in lower demand for key commodities such as iron ore and coal.

The Korean won USDKRW, -1.03% was last down 0.3% at 1193.76 against the U.S. dollar compared with late yesterday in Asia. In early trading indications, shares were down 7.7% at $58.00. In currency markets, the US dollar gained to 119.8390 yen from Monday’s 118.6930 yen. ICBC lost 1.5 percent to 4.

But as long as Shanghai is in free fall, Hong Kong can’t rise either, because China’s largest companies are dual-listed in both locations and there is the Shanghai Hong Kong Connect to impose a certain degree of law of one price.

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Brent LCOV5, +3.70%, the global oil benchmark, was up 0.9% at $43.06 a barrel, but fell below $45 a barrel on Monday for the first time in six years.