China Markets Live - Hong Kong’s Hang Seng sinks to close below 19,000 for first time since 2012
Hong Kong dollar plunges amid continued capital outflows; speculations grow that the city may abandon the US dollar peg
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 slides 3.8 per cent to close below 19,000 for the first time since July, 2012
- Shanghai Composite and Shenzhen Composite both close down 1 per cent
- Hong Kong dollar falls to the weakest level since August 2007, fuelling speculations that the city may abandon the peg to the US dollar
4:48 pm By Laura He
Asian stock markets suffered a region-wide sell-off. Japan stocks entered bear market, as Tokyo’s Nikkei Average tumbled 3.7 per cent to finish at 16,416.19, marking a more than 20 per cent drop from its recent high in June. Seoul’s Kospi Composite Index declined 2.3 per cent to finish at 1,845.45, and Sydney’s S&P/ASX 200 settled 1.3 per cent lower at 4,841.5. India’s Sensex slid 2.4 per cent to 23,894.30 in the afternoon session.
Meantime, oil futures plunged in Asia trade. February WTI crude fell 3.3 per cent to US$27.51, the lowest intraday level in more than 12 years. March Brent crude dropped 3.1 per cent to US$27.86 a barrel.
4:21 pm By Xie Yu
The Hang Seng Index dropped 3.82 per cent, or 749.51 points to close at 18,886.30. The H-share Index, tracking mainland-based companies, finished 4.33 per cent or 362.36 points lower at 8,015.44.
Below is the daily chart of the Hong Kong market. Hang Seng Index (yellow line), H-share index (purple line). The percentage at the end show the difference from the opening, not the previous close. Click to enlarge the chart.
3:53 pm By Enoch Yiu
Hong Kong dollar briefly dropped to 7.8241 in the afternoon, before having a V-shaped bounce to 7.8212. However, it still remained the lowest since August 2007.
Below is the daily trading chart of the Hong Kong dollar which shows the V-shaped bounce at around 3:30 pm. Click to enlarge the chart.
3:25 pm By Xie Yu
Chinese stocks retreated Wednesday from a previous rally, as investors waited for more clear signals from the authority to stabilise the markets, analysts said.
“People’s sentiments are reviving from the recent low point as the central bank’s movements temporarily stabilised the currency,” said Adam Xu, a mutual fund manager based in Shanghai.
“Most investors are holding low positions, waiting for more signals from the mainland and US authorities,” he added.
3:11 pm By Xie Yu
The mainland stock markets ended lower on Wednesday, after posting the biggest daily gains in more than two months on Tuesday.
The Shanghai Composite Index eased 1.03 per cent, or 31.04 points to 2,976.69. The CSI300 fell 1.51 per cent, or 48.75 points to 3,174.38.
The Shenzhen Composite Index lost 1.03 per cent, or 19.44 points to 1,876.31. The Nasdaq-style ChiNext Index fell by 1.65 per cent, or 37.05 points to 2,204.65.
Below is the one-day chart for the mainland market. Shanghai Composite Index (yellow line), CS1300 Index (purple line), Shenzhen Composite 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.
2:56 pm By Xie Yu
Oil stocks plummetted in Hong Kong, as Petro China traded 6.89 per cent lower at HK$4.19, Sinopec lost 6.48 per cent to HK$3.90, and offshore oil giant Cnooc fell 5.71 per cent to HK$6.61.
2:33 pm By Xie Yu
ING issued a report on Wednesday morning, saying there were both “good news and bad news” on China.
Tim Condon, an analyst from ING, said:
“The good news was that policymaking was sufficiently adroit to offset an unexpected adverse shock to exports and manufacturing from the energy price crash in 2014 for growth to hit the “about 7 per cent” target. The bad news was that economic momentum slowed in December. Growth in all the monthly indicators – IP, retail sales, FAI – was down from November.”
“More fiscal support is needed and on press reports is on the way. New government bond issuance for local governments in 2016 reportedly will rise to CNY 1 trillion (1.5 per cent of GDP) from CNY 600 billion in 2015. The local government bond swap reportedly will be expanded to CNY 5 trillion from CNY 3.2 trillion. We also expect the fiscal deficit to increase toward 3 per cent of GDP from 2.7 per cent in 2015. ”
2:18 pm By Laura He
Hong Kong dollar and the city’s stock markets are “the biggest pain points” in Asia so far today, as speculation grows that the Hong Kong’s Monetary Authority (HKMA) may not be able to keep the currency peg to the US dollar, said Angus Nicholson from IG Group.
“Speculators are betting that the HKMA will not be able to hold the peg for the Hong Kong dollar against the USD,” he said, adding that the elimination of liquidity in offshore Chinese yuan has “pushed devaluation speculation over the HKD”.
Besides, the dire deflationary environment in Hong Kong may also prompt a currency depreciation.
As Hong Kong has kept the USD/HKD rate firmly within the HKD 7.75-7.85 band since 1983, short bets on the local currency offer “huge potential profits” with limited downside risk, just like other successful bets on pegged currencies such as the Thai Baht in 1997 and the British pound in 1992, Nicholson said.
“When pegged currencies are let go, they really fly,” he said.
Nicholson added that the short bets on the Hong Kong dollar are hammering Hong Kong stocks, with the Hang Seng China Enterprises briefly hit its lowest level since 2009 after losing 4.9 per cent.
1:38 pm By Xie Yu
The mainland markets remained weak after lunch. The benchmark Shanghai Composite Index dropped 1.16 per cent, or 34.78 points, to 2,972.96. The CSI300 eased 1.52 per cent, or 48.92 points, at 3,174.21.
The Shenzhen Composite Index fell 1.15 per cent, or 21.72 points, to 1,874.02. The Nasdaq-style ChiNext traded 1.80 per cent or 40.26 points lower at 2,201.44.
1:31 pm By Xie Yu
Hong Kong market is in a red sea. The benchmark Hang Seng Index traded down 3.51 per cent, or 689.03 points, at 18,946.78. The H-share Index, tracking mainland-based companies, lost 4.25 per cent, or 356.11 points, to 8,021.69.
12:11 pm By Jessie Lau
The Hang Seng Index finished the morning trade at 18,894.88, down 3.77 per cent or 740.93 points from Tuesday’s close, and the Hang Seng China Enterprises Index sank 4.89 per cent or 409.50 points to 7,968.30.
Below is the midday chart of the Hong Kong market. Hang Seng Index (yellow), H-share index (purple). The percentage at the end show the difference from the opening, not the previous close. Click to enlarge the chart.
11:48 pm By Jessie Lau
The Shanghai Composite Index finished the morning session at 2,966.66, down 1.37 per cent or 41.08 points. The CSI 300 fell 1.64 per cent or 52.80 points to end at 3,170.33 by lunch break.
The Shenzhen Composite Index fell 1.16 per cent or 21.97 points to close at 1,873.78, and the Nasdaq-style ChiNext dropped 1.68 per cent or 37.73 points to 2,203.96.
Below is the midday chart of mainland stock indexes.
Shanghai Composite Index (yellow), Shenzhen Composite Index (green), CS1300 Index (purple) and ChiNext (blue). The percentage at the end of the chart represents the different from the opening, not from previous close. Click to enlarge the chart.
11:22 am By Jessie Lau
The Hang Seng Index fell 3.41 per cent or 670 points to 18,965.81.
11:09 am By Jessie Lau
The Hang Seng Index fell 3.14 per cent or 616.77 points to 19,019.04, the Hang Seng China Enterprises index dropped 3.18 per cent or 266.41 points to 8,111.39.
Meantime, the Shanghai Composite Index traded at 2,982.98, down 0.82 per cent or 24.76 points. The CSI 300 lost 1.04 per cent or 33.54 points to 3,189.59.
The Shenzhen Composite Index moved down 0.34 per cent or 6.4 points to 1,889.35, and the Nasdaq-style ChiNext traded 0.83 per cent lower, or down 18.52 points, to 2,223.18.
11:00 am By Jessie Lau
Shares of Hong Kong property developers plunged, as speculations grow that Hong Kong might raise interest rates to halt the local currency’s depreciation. CK Property sank 5.599 per cent to HK$42.15, Henderson Land skidded 3.143 per cent to HK$41.6, Hang Lung Group declined 2.44 per cent to HK$21.95, and New World Development fell 3.075 per cent to HK$6.62.
10:34 am By Jessie Lau
The Hang Seng Index fell 2.3 per cent or 451.75 points to 19,184.06, and the Hang Seng China Enterprises index shed 2.28 per cent or 190.77 points to 8,187.03.
However, the Shanghai Composite Index rose 0.07 per cent or 1.99 points to 3,009.73, while the CSI300, which tracks the large caps listed in Shanghai and Shenzhen, dropped 0.18 per cent or 5.85 points to 3,217.28.
The Shenzhen Composite Index rose 0.42 per cent or 8.03 points to 1,903.78, and the Nasdaq style ChiNext added 0.07 per cent or 1.62 points to 2,243.32.
10:33 am By Enoch Yiu
Offshore yuan continued falling Wednesday morning, trading at 6.5999, down 0.15 per cent from Tuesday.
Onshore yuan was unchanged at 6.5784. The currency gained 0.01 per cent on Tuesday.
The spread between the onshore and offshore yuan has narrowed down to 275 basis points, down from a record 1,400 basis points on January 7.
10:32 am By Laura He
Shanghai stocks had a wary start Wednesday morning, following a 3.2 per cent jump in the previous session, triggered by hopes of further stimulus after China’s GDP growth in 2015 marks the weakest in 25 years. However, some analysts expected Chinese equities to drop well below the current 3,000 level after the bursting of stock bubble.
“The Shanghai Composite does look a bit precarious after its 3 per cent gain and its retaking of the 3000 level yesterday. Personally, I think a trip down to 2500 still seems likely, and is probably needed to purge some of the ‘irrational exuberance’ of the market in 2015,” Angus Nicholson, an analyst from IG Group, said Wednesday.
He also expected China’s economic slowdown to push commodity prices lower.
“Chinese data yesterday made it pretty clear that momentum in its economic activity would steadily decline into 2016,” he said, “A lot of planned fiscal spending for Q1 2016 was brought forward into Q3/Q4 2015, which means investment spending could decline quite sharply in 1H 2016.”
“This will undoubtedly affect Chinese demand for commodities,” Nicholson noted.
In particular, he predicted a sharp fall in iron ore prices in a month or two, due to a rise in Chinese iron ore stockpiles and the iron price.
10:02 am By Enoch Yiu
Hong Kong dollar fell for a fifth day in a row to 7.8218, the lowest level since August 2007. The stock market slump, the weak economy and the US interest rate rise have caused capital outflows and led the local currency to fall.
9:45 am By Enoch Yiu
The People’s Bank of China set Wednesday the yuan’s mid-price against the US dollar at 6.5578, 18 basis points stronger than on Tuesday, when it set the mid-price 6 basis points weaker.
It also set the yuan’s mid-price against the euro weaker by 140 basis points to 7.1627, and the yuan’s reference rate for every 100 yen stronger by 50 basis points at 5.5834. The yuan’s mid-price against the pound was set 653 basis points stronger at 9.2987.
Traders are allowed to trade up to 2 per cent either side of the mid-price for the day.
9:40 am By Jessie Lau
The Hang Seng Index opened at 19,332.22, down 1.55 per cent or 303.59 points from Tuesday, while the Hang Seng China Enterprises index fell 2.11 per cent or 176.73 points to 8,201.07.
The Shanghai Composite Index opened at 2,993.01, down 0.49 per cent or 14.72 points, and the CSI300 — which tracks the large caps listed in Shanghai and Shenzhen — fell 0.40 per cent or 12.97 points to 3,210.16.
The Shenzhen Composite Index fell 0.34 per cent or 6.5 points to 18,89.24 while the Nasdaq style ChiNext dropped 0.65 per cent or 14.64 points to 2,227.06.
9:08 am By Jessie Lau
Hong Kong’s stock market is poised to open higher on Wednesday, as the Hang Seng Index futures spot January contract gained 0.01 per cent to 19,622 in the pre-trade session, while H-share index futures fell 1.86 per cent to 8,227.
US stocks posted mixed performance on Tuesday, after oil prices tumbled further. The S&P 500 index was up 0.05 per cent or 1 point at 1,881.33. The Dow Jones Industrial Average closed up 0.17 per cent or 27.94 points at 16,016.02. The Nasdaq Composite finished down 0.26 per cent or 11.47 points at 4,476.95.