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China Stock Turmoil 2015
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An investor puts up his feet while monitoring stock prices in China's volatile markets this week. The markets in the country are closed Thursday for a holiday. Photo: AFP

Live | China Markets Live - All Chinese markets closed for holiday, Japan market finishes slightly up

The intense volatility of recent weeks has every chance of remaining the core underlying theme of activity. Investors are increasingly focused the broader question of how this episode might affect the wider economy.

Welcome to the SCMP's live markets blog. The intense volatility of recent weeks has every chance of remaining the core underlying theme of activity. Investors are increasingly focused the broader question of how this episode might affect the wider economy as many suspect the equity bubble has yet to fully deflate. We'll bring you the key levels, trading statements, price action and other developments as they happen.

Here’s a summary of market action in Asia along with analyst comments and views: 

  • Shares in Japan close up 0.5 per cent as volatility weighs
  • Australian shares down near 2-year low
  • Wall Street, global stocks shoot up as fears over China abate for now
  • Chinese markets closed Thursday and Friday for holidays, reopens Monday
  • Hong Kong market shut Thursday for holiday, reopens Friday
  • Investors look toward US jobs data due out on Friday, US markets shut Monday for Labor Day

 

3:54pm: CLSA analyst Aaron Fischer on Macau's casinos:

“We have seen six consecutive months of gross gaming revenue (GGR) year on year declines in the thirties. This is a tad worse than our original assumptions and we make per cent decline in 2015, versus -29 per cent previously. 

We expect September to post year on year growth in the negative thirties but it should start to get easier after that. Melco Crown’s Studio City, opening on 27th October, could prove to be a long overdue catalyst for the sector, as the first free-standing property to open since 2012. 

We expect growth to turn positive in February 2016, as we enter the Year of the Monkey in China. After that, new properties from Wynn, Sands, Louis XIII and MGM make 2016 a big year for Macau. 

As a result, we refresh target prices for the operators: GEG (HK$32 from HK$43.6), MCE (US$20 from US$24), MGM (HK$15 from HK$16.1), Sands (HK$30 from HK$34.8), SJM (HK$7.88 from HK$8.75), Wynn Macau (HK$16 from HK$18), LVS (US$55 from US$60), Wynn Resorts (US$104 from US$117) and MGM (US$24 from US$26).”

Click to enlarge the two charts below:

3:02pm: In Australia, Reuters said the S&P/ASX 200 index reversed course to close down 1.4 percent or 73.7 points at 5,027.8. Aside from an August 24 trough, it was the benchmark’s weakest finish since July 2013. The index has dropped 12 per cent in the past month.

3:00pm: Reuters closing report on Japan's equity market.

Japanese stocks rose on Thursday as bargain hunters picked up shares which have been battered for weeks by fears of a China-led global slowdown.

Overnight gains on Wall Street and a market holiday in China also helped support sentiment, but volatility remained high, suggesting investors remain on edge.

The Nikkei share average edged up 0.5 percent to settle at 18,182.39 points, snapping a three-day losing streak that knocked 5.4 per cent off of the benchmark index by the end of trading on Wednesday.

2:42pm: Mid-afternoon roundup of Asian shares from the Associated Press:

Japan’s Nikkei 225 was up 1.4 percent to 18,350.85 and South Korea’s Kospi gained 0.1 percent to 1,916.93. Stock markets in Southeast Asia also rose while Australia’s S&P/ASX 200 shed 1.1 percent to 5,046.50. New Zealand’s benchmark also fell. Taiwan’s benchmark added 0.6 percent to 8,086.10. 

12:40pm: Reuters midday Asian markets wrap:

Asian shares struggled to recover on Thursday with volatility remaining high, while emerging economy and commodity-linked currencies softened as investors worried about the global repercussions of slower growth in China.

Japan’s Nikkei rose for the first time in four days, gaining 1.4 per cent, while South Korea’s Kospi edge up 0.4 per cent, although MSCI’s broadest index of Asia-Pacific shares outside Japan erased early gains.

12:37pm: Rabobank Morning Call: 

“Volatility was also evident in markets again yesterday. Shanghai opened down over 4.5 per cent but managed to close at just -0.2 per cent ahead of today’s big parade.

Meanwhile, onshore yuan rallied all the way back to 6.3559, further muddying the waters over what it is exactly that the People’s Bank of China are trying to achieve with its recent FX policy shift: market mechanisms are still not operating freely, and the positive economic impact of even mild devaluation is already being rolled back, it seems.

In other markets it was green closes, with the S&P +1.8 per cent and Euro Stoxx +0.3 per cent. Perhaps part of that was due to the fact that US data were hardly supportive of the Fed going as soon as this month.

For example, although ADP employment was only marginally lower than consensus at 190K, unit labour costs in Q2 tumbled 1.4 per cent while productivity surged 3.3 per cent, and at the same time core factory goods orders plunged 0.6 per cent month-on-month and are down a cumulative 2.3 per cent since the start of 2015, continuing the down-trend seen since September last year when USD began to surge again.

The Fed’s Beige Book was also as tepid as its name suggests, with generally “moderate” or “modest” growth recorded in 11 of 12 districts, and “slight” growth in one other.”

11:21am: Hong Kong dollar market is closed today for a holiday.

Euro/dlr weaker 0.07 per cent at 1.1219. Dlr/yen at 120.57, stronger by 0.20 per cent. Pound/dlr weaker by 0.03 per cent to 1.5295. Australian dollar to US dollar weaker by 0.24 per cent to 0.7022.  

11:17am: SG Analyst Brian Jones ahead of US jobs data on Friday:

“We expect the Bureau of Labor Statistics to report that hiring activity reaccelerated in August. Our model projects that government statisticians will report that non-agricultural concerns added 250,000 net new workers last month, eclipsing the 235,000 average posted over the May-July span. Several fundamental and technical factors underpin our call for a pickup in job growth last month. 

Consistent with reduced layoffs during the reference period, the average number of persons filing initial jobless claims contracted by 5,000 to 272,000 over the four weeks leading up to the August establishment survey – the lowest tally in three months. 

Meanwhile, the number of persons collecting unemployment insurance benefits was little changed at 2.27 million between surveys, implying that previously jobless persons continue to find work.”

Click to enlarge the two charts below:

 

10:51am: SG Morning Call:

“Today in Europe, the main focus will converge on the ECB meeting. However, we expect the ECB meeting to be a low-key event with no change in policy and only minor adjustments to staff projections.

Among the statistical releases, we expect a marginal downward revision in the final August readings of Euro area services and composite PMI from the flash readings (closer to the four-year-high). Meanwhile, UK services PMI is expected to bounce back to 58.3 in August from 57.4 in July.

Turning to the US, we call for a third consecutive rise in the ISM non-manufacturing index to an 18-year high of 61.5 in August.  On record, however, the signals from the services sector have been mixed in August with the national Markit Flash US services PMI business activity index retreating to 55.2. We expect the final Markit US services PMI to print at 55 in August.

In Asia Pacific, Australia is likely to post an elevated trade deficit in July at AUD 2.8 billion, while retail sales should show signs of consolidation with a marginal 0.1 per cent month-on-month gain in July.

Meanwhile, retail sales in Australia are likely to have grown marginally by 0.1 per cent month on month in July, probably consolidating after the 0.7 per cent surge in June.”

Click on the charts below to enlarge. 

9:53am: Reuters reported the dollar climbed against the euro and yen on Thursday as global investors tentatively stepped back into riskier equities, tempering the recent rush to unwind carry trades that had boosted the single currency and the Japanese unit.

The dollar was up 0.3 percent at 120.655 yen, having rebounded sharply from a low of 119.255 overnight. The euro dipped to $1.1210, adding to an overnight loss of 0.8 percent.

9:50am: Tokyo shares popped up following stronger performance of Wall Street overnight. The Nikkei-225 index at Tokyo Stock Exchange rose 258.22 points to 18,353.62. The Topix index of all first section shares rose 1.59 percent or  23.38 points to 1,489.37.

9:46am: Offshore yuan trades at 6.4495 to the dollar, stronger from the previous close at 6.4500. Onshore yuan market was closed Thursday for a holiday.

9:12am: ING Morning Call:  

On Global Growth: “June world trade volume data were recently released. On a seasonally adjusted basis, trade grew 1.9 per cent month-on-month, more than reversing May’s 1.3 per cent contraction. For the second quarter, exports contracted 2 per cent, narrower than 1Q’s 5.8 per cent contraction. Measured year-over-year, 1H15 growth slowed to 1.8 per cent from 3.3 per cent in 2014. 

The data make it clear that the adverse terms of trade shock to commodity exporters from the 2H14 collapse in commodity prices dominated the positive shock to commodity importers. 

We expected lower commodity prices to boost consumer spending in the big North Asian economies, which import virtually all their petroleum needs. Our rationalization for why our view was wrong is that their exports re-priced lower for the crash in commodity prices. At the world level the re-pricing is evident in the swing to an 11.9 per cent year-on-year year-to-date contraction in world trade values in 1H15 from +0.9 per cent growth in 2014. 

Our rationalization is at odds with the view that a sharp slowdown in China’s economic growth coming into 2015 was behind the deceleration in world trade growth in 1H15.

The export re-pricing was associated with a slowdown in China’s GDP growth to 7 per cent in 1H15 from 7.3 per cent in 2H14, in Korea’s to 2.3 per cent from 3 per cent and Taiwan’s to 2.2 per cent from 3.9 per cent. We infer that countercyclical policy was much more successful at offsetting the adverse trade shock in China than in its neighbours. 

Bottom line: We think commodity prices have been the most victimized by the China rolling crisis scenario and we think that will remain the case until China hard-landing fears fade.” 

9:12am: ING: 

On China: “We credit the People’s Bank of China stronger fixings for helping to restore a bit of calm to financial markets yesterday. It has fixed stronger than the previous spot closing since August 20. We assume the stronger fixings have reduced anxiety about a maxi-devaluation, and therefore about a China hard landing.

Bottom line: We are reviewing our yearend 6.55 USDCNY forecast for downward revision (spot 6.3559, Bloomberg consensus 6.50, NDF 6.50).”

8:48am: Wall Street and global stocks climb as fears over China's economy ease. For more on story, click here.

7:55am: The onshore spot yuan closed at 6.3544 on Wednesday from the Tuesday close of 6.3642. Offshore yuan traded at 6.4500 on Wednesday versus Tuesay finish at 6.4201. The mid-price fix Wednesday was at 6.3619 set by the People’s Bank of China.  

7:50am: The one-day chart of Hong Kong's Hang Seng Index (orange) and H-share index (purple) during trading yesterday.

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