Thursday 28 Mar 2024
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WELLINGTON/HONG KONG (July 9): Asian stocks fell to a six-month low amid concern China’s equity rout is spreading to other financial financial markets. Copper and the New Zealand dollar dropped, while U.S. index futures rallied.

The MSCI Asia Pacific Index lost 1.2 percent by 10:49 a.m. in Tokyo, trading at its lowest level since January. Japan’s Topix index headed for its worst two-day tumble since February last year, while Chinese stocks opened lower again with 50 percent of the mainland equities halted. Standard & Poor’s 500 Index futures rose 0.2 percent after U.S. shares slid. Copper fell 0.3 percent, while the kiwi lost 0.3 percent and Australia’s dollar slipped.

China is bolstering efforts to aid the market on an almost nightly basis as it seeks to arrest a selloff that has erased more than $3 trillion of value in the past few weeks and quashed demand for risk assets globally. Chinese consumer prices rose more than estimated in June, while producer costs slumped a record 40th straight month. The Federal Reserve registered concern over China as early as last month, with meeting minutes signaling potential risks to the U.S. from there and Greece.

“We’re clearly in the middle of a market panic of some magnitude in China and unfortunately the regulator response has really been quite harmful so far,” Michael Shaoul, who oversees $5 billion, as chief executive officer at Marketfield Asset Management in New York, said on Bloomberg TV. “There’s been much too much market intervention by the securities authorities, so it’s really removed the ability of the Chinese mainland market to operate in a free manner. At the same time, there’s been much less intervention than you would want to see by the central bank.”

Selling Ban

China banned major stockholders from selling stakes in listed companies late Wednesday, the latest in a barrage of measures that have included cuts to interest rates and banks’ reserve requirements. Brokerage Haitong Securities Co. said it will buy back as much as 21.6 billion yuan ($3.48 billion) of its Shanghai and Hong Kong-listed shares.

The new moves are a sign of “desperation” and will fuel fear among investors, said Mark Mobius, executive chairman of the Templeton Emerging Markets Group. The efforts just “postpone the inevitable,” according to Wells Fargo Funds Management.

The rout that has seen Chinese shares slide more than 23 percent the past two weeks took on a new dimension Wednesday, with the Shanghai Composite Index sinking 5.9 percent to its lowest level since March 17. At least 1,331 companies halted trading on mainland exchanges and another 747 slumped by the 10 percent daily limit.

 

 

 

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