China Markets Live - Stock rout worsens as Hang Seng hits fresh three-year low; Shanghai shares tumble
Markets shrug off an aggressive liquidity injection by the People’s Bank of China
Welcome to the SCMP’s live China markets. The intense volatility in Chinese markets into 2016 due to the implementation of the circuit breaker has roiled world financial markets. Investors are increasingly focused on the broader question of how this episode might affect the wider economy of the country. We’ll bring you the key levels, trading statements, price action and other developments as they happen.
Here is a summary of market movements so far today:
- Hong Kong’s Hang Seng extends Wednesday’s sell-off and ends down 1.8 per cent at 18,542.15, the lowest settlement since June, 2012
- Shanghai Composite tumbles 3.2 per cent to 2,880.80, the lowest close since Dec., 2014
- Shenzhen Composite sinks 4 per cent at close
- PBOC injects 400 billion yuan into money markets via reverse repos, largest of its kind in three years
4:54 pm By Xie Yu
Statistics show A-shares investors are tightening their purse strings for more clues. The outstanding margin lending balance through brokerages, recorded by the Shanghai and Shenzhen bourses stood at 991.56 billion yuan (HK$1.18 trillion) by Wednesday, marking the lowest level since October 22.
4:34 pm By Laura He
Asian stock markets mostly declined Thursday. Japan’s Nikkei Average slid 2.4 per cent to close at 16,017.26, after falling into bear market territory on Wednesday. South Korea’s Kospi Composite lost 0.3 per cent to 1,840.53, while Australia’s S&P/ASX 200 finished modestly higher at 4,864.00, up 0.5 per cent.
In the oil market, crude futures dropped further in Asian trade, after WTI crude plunged to the lowest level in nearly 13 years on February contract’s expiration day on Wednesday. March WTI crude, the current front-month contract, lost 0.5 per cent to US$28.18 a barrel. March Brent crude dropped 0.7 per cent to US$27.7 a barrel.
4:24 pm By Xie Yu
All the sectors on A-shares market saw a broad-based decline. Utilities, transport and aerospace tech companies recorded the biggest losses.
In Hong Kong, mining companies and automotive manufacturers were the biggest losers.
4:20 pm By Xie Yu
Investors should stay prudent under current market conditions and “do not rush to catch the falling knives”, China International Capital Corporation said a note on Thursday.
“The brief rebound earlier this week made some people believe the market is reviving and it was time to buy cheap (stocks). But actually the situation is turning worse, not better, with the oil price and Hong Kong dollar falling. The global markets are panicking as a big sell-off is sweeping Asian (Hong Kong and Japan in particular), European, and US markets.”
4: 16 pm By Xie Yu
The Hang Seng Index finished 1.82 per cent lower, or 344.15 points lower, to 18,542.15. The H-share Index, tracking mainland based companies, lost 2.24 per cent, or 179.80 points to close at 7,835.64.
Hong Kong dollar bounced back and traded at 7.8180 against US dollar at 4 pm, after hitting an eight-and-a-half year low of 7.8294 at midnight.
The one day chart of the Hong Kong market. Hang Seng Index (yellow line), H-share index (purple line). The percentage at the end shows the difference from the opening, not the previous close. Click to enlarge the chart.
3:08 pm By Xie Yu
The mainland markets closed sharply lower, as the benchmark Shanghai Composite Index tumbled 3.22 per cent, or 95.89 points to end at 2,880.80. The CSI300 Index fell 2.93 per cent, or 92.94 points 3,081.44.
The Shenzhen Composite Index dropped 4.01 per cent, or 75.32 points to 1,800.99. The Nasdaq-style ChiNext lost 4.18 per cent, or 92.24 points to 3,081.44.
The one-day chart for the mainland market. Shanghai Composite Index (yellow line), Shenzhen Composite Index (purple line), CS1300 Index (green line) and ChiNext (blue line). The percentage at the end of the chart represents the difference from the opening, not from previous close. Click to enlarge the chart.
2:19 pm By Xie Yu
Hong Hao, chief strategist at Bocom International, said:
“Currency volatility soars (in Hong Kong stocks) and suggests market stress. Interventions in mainland assets such as the RMB and A-shares have prevented market price from adjusting towards China’s deteriorating fundamentals, and forced volatility to manifest in Hong Kong assets. Potential unwind of structural products as the HSCEI (Hang Seng China Enterprises Index) falls towards 7,000-8,000 can induce further short-term market stress. But these leveraged positions are weak hands, and their capitulation will eventually give a better entry point.”
1:54 pm By Xie Yu
The Hang Seng Index lost 1.30 per cent, or 245.81 points, at 18,640.49. The H-share Index, tracking mainland companies, fell 1.65 per cent, or 132.18 points to 7,883.26.
1:54 pm By Xie Yu
The mainland markets gave up all the gains from the morning session, as the Shanghai Composite Index traded down 1.06 per cent, or 31.56 points, to 2,945.13. The CSI300 fell 0.94 per cent, or 29.94 points to 3,144.44.
The Shenzhen Composite Index retreated 1.21 per cent, or 22.64 points to 1,853.67. The Nasdaq-style ChiNext moved 0.85 per cent, or 18.71 points lower at 2,185.93.
12:42 pm By Enoch Yiu
Charles Li, chief executive of Hong Kong Exchanges & Clearing, said the exchange may launch a third board or revamp the GEM (the Growth Enterprise Market board) to lure more new listings.
12:42 pm By Laura He
The People’s Bank of China injected 40 billion yuan into the financial system on Thursday via reverse repurchase agreements (reverse repos), following its recent moves to ease a seasonal liquidity squeeze ahead of the Lunar New Year holiday.
The PBOC offered 11 billion yuan worth of seven-day reverse repos, at an interest rate of 2.25 per cent, and 29 billion yuan worth of 28-day reverse repos, with an interest rate of 2.6 per cent, in its open market operations, the central bank said on its website.
The moves bring the PBOC’s net injection of funds to 315 billion yuan this week.
On Tuesday, the Chinese central bank also added 150 billion yuan of liquidity through the standing lending faciliy (SLF), a short-term lending tool.
The PBOC usually injects funds to alleviate the seasonal cash crunch before China’s week-long Lunar New Year holiday, which starts Feb. 8 this year.
12:12 pm By Jessie Lau
Hong Kong’s Hang Seng Index closed the morning session higher at 18,945.60, up 0.31 per cent or 59.30 points.
The Hang Seng China Enterprises Index rose 0.21 per cent or 16.94 to finish at 8,032.38 at the midday break.
Below is the midday chart of the Hong Kong market. Hang Seng Index (yellow), H-share index (purple). The percentage at the end shows the difference from the opening, not the previous close. Click to enlarge the chart.
11:37 am By Jessie Lau
The Shanghai Composite index closed the morning session at 2,991.78, up 0.51 per cent or 15.09 points. The CSI 300 gained 0.65 per cent or 20.69 points to 3,195.07.
The Shenzhen Composite index rose 0.78 per cent or 14.68 points to 1,890.98, and the Nasdaq-style ChiNext advanced 1.45 per cent or 31.90 points to 2,236.55.
Below is the midday chart for the mainland market. Shanghai Composite Index (yellow), Shenzhen Composite Index (green), CS1300 Index (purple) and ChiNext (blue). The percentage at the end of the chart represents the difference from the opening, not from previous close. Click to enlarge the chart.
11:09 am By Jessie Lau
The Hang Seng Index rose 1.32 per cent or 248.51 points to 19,134.81, and the Hang Seng China Enterprises index gained 1.29 per cent or 103.55 points to 8,118.99.
11:09 am By Jessie Lau
The Shanghai Composite index dropped 0.02 per cent or 0.69 points to 2,976, while the CSI 300 gained 0.09 per cent or 3.01 points to 3,177.39.
The Shenzhen Composite index rose 0.63 per cent or 11.83 points to finish at 1,888.14, and the Nasdaq-style ChiNext gained 1.24 per cent or 27.44 points to 2,232.09.
10:39 am By Xie Yu
A January fund manager survey by Bank of America Merrill Lynch found:
“Just 12 per cent believe a global recession will occur in the next 12-months, investors remain OW (overweight) equities & UW (under weight) bonds, and stubbornly long tech, Eurozone & Japanese stocks (assets now most vulnerable to a redemption/recession shakedown).
Investors raise cash, cut growth and profit expectations, and rotate defensively (selling stocks, resources, industrials, banks & EM (emerging markets), and rotating to healthcare, staples, cash & bonds).”
10:32 am By Enoch Yiu
A research report by Bank of America Merrill Lynch said:
“Selling pressure against Hong Kong dollar intensifies with FX (forex) option reporting a cumulative notional volume of US$15 billion over 3 months.”
“We revise our USD/HKD forecast to 7.85 for 2016 as a whole and revise our 3M (3-month) HIBOR (Hong Kong Inter-bank Offered Rate) forecast up.”
10:17 am By Jessie Lau
The Hang Seng Index rose 1.35 per cent or 254.80 points to 19,141.10, and the Hang Seng China Enterprises index gained 1.38 per cent or 110.28 points to 8,125.72.
However, The Shanghai Composite Index fell 0.93 per cent or 27.80 points to 2,948.89, and the CSI300 lost 0.83 per cent or 26.25 points to 3,148.13.
The Shenzhen Composite Index fell 0.66 per cent or 12.32 points to 1,863.98, and the Nasdaq style ChiNext dropped 0.09 per cent or 2 points to 2,202.64.
10:10 am By Enoch Yiu
Offshore yuan continued falling Thursday morning, trading at 6.6033 at 10 am. The currency has fallen for three days in a row. It lost 0.15 per cent and 0.13 per cent separately on Wednesday and Tuesday. On Monday, the offshore rate rose 0.5 per cent, following a 1 per cent gain last week after the intervention of the People’s Bank of China.
Meanwhile, the onshore yuan traded unchanged at 6.5778. The onshore rate was also flat on Wednesday. It rose 0.01 per cent on Tuesday.
The spread between the onshore and offshore yuan has narrowed down to 255 basis points, down from a record 1,400 basis points on January 7.
10:01 am By Ben Wescott
Global investment bank Barclays announced Thursday that it will dramatically wind back its Asia business operation, closing a number of equity services in the region.
In an email to clients on Thursday, the bank said it would be closing its cash equity research, sales and trading, and convertible bond trading businesses in all Asian countries.
“Our prime services and synthetics business will continue to operate as before across the region for financing and execution,” the email said.
The move had been anticipated for a couple of weeks, with media reports saying chief executive Jes Staley was trying to trim costs.
Further cuts are expected to be announced in Barclay’s operations in continental Europe and Latin America on Thursday, as the business focuses on the US and British markets.
9:59 By Enoch Yiu
Hong Kong dollar bounced back to trade at 7.8080 in early trade Thursday morning, after hitting 7.8294 at midnight, which was the lowest in eight and a half year.
9:40 am By Enoch Yiu
The People’s Bank of China set Thursday the yuan’s mid-price against the US dollar at 6.5585, 7 basis points weaker than on Wednesday, when it set the mid-price 18 basis points stronger.
Meantime, it set the yuan’s mid-price against the euro stronger by 241 basis points to 7.1386, and the yuan’s reference rate for every 100 yen weaker by 203 basis points at 5.6037. The currency’s mid-price against the pound was set 260 basis points weaker at 9.3247.
Traders are allowed to trade up to 2 per cent either side of the mid-price for the day.
9:34 am By Jessie Lau
Hong Kong stocks opened higher on Thursday. The Hang Seng Index traded up 1.02 per cent or 192.83 points at 19,079.13 in early trade, and the Hang Seng China Enterprises index gained 0.42 per cent or 33.39 points to 8,048.83.
On the mainland, the Shanghai Composite Index fell 1.42 per cent or 42.30 points to 2,934.39, and the CSI300 lost 1.20 per cent or 38 points to 3,136.38.
The Shenzhen Composite Index dropped 1.61 per cent or 30.27 points to 1,846.04, and the Nasdaq style ChiNext moved down 1.10 per cent or 24.26 points to 2,173.31.
9:24 am By Jessie Lau
Hong Kong stocks futures traded higher in the pre-trade session on Thursday morning, as the Hang Seng Index futures spot January contract gained 1.45 per cent or 273 points to 19,120, while the H-share index futures gained 1.32 per cent or 106 points to 8,111.
Overnight, all major US indices closed lower , with the Dow Jones Industrial Average finishing down 1.56 per cent at 15,766.74, the S&P 500 1.17 per cent down at 1,859.33. The Nasdaq Composite finished down 0.12 per cent at 4,471.69.
Elsewhere in Asia, Tokyo’s Nikkei 225 rose 0.58 per cent to 16,510.99 on Thursday.