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China Stock Turmoil 2015
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Rows of Chinese investors watch stock prices in Shanghai tumble in the last hour of trading to its biggest single day loss since 2007. Photo: Xinhua

Live | China Markets Live - Shanghai and Shenzhen ends down but off lows; Hong Kong finishes shade up

Shanghai and Shenzhen recoup morning losses although closes down for the day. Hong Kong barely higher at conclusion of session

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.

 

 

4:14pm: The Hang Seng index closed up 0.62 per cent at 24,503.94. The H share index dropped 0.51 per cent to 11,173.04. 

4:10pm: China Securities Regulatory Commission is probing some heavy share dumping that may have led to the market’s wild ride July 27, the regulator says on its official blog.  

4:09pm: LME Clear, the clearing house for the London Metal Exchange (LME) market, announces today it can now accept offshore renminbi (CNH) as eligible cash collateral, effective immediately. This follows regulatory approval for the initiative from the Bank of England.

3:47pm: Macau said 2015 gross domestic product could shrink 15 per cent this year, largely due to contraction in the casino industry.  

Shares in Sands China fell 1.23 per cent to HK$32.15, while Galaxy Entertainment retreated 0.59 per cent to HK$33.45 in late trade.

3:40pm: Regional stock markets were largely flat today. The Nikkei 225 Index was down 0.1 per cent and the Australia’s S&P/ASX 200 Index wa little changed after dropping as much as 1.1 per cent at one stage.

3:39pm: Cheuk Nang Property chairman Cecil Chao sold his headquarters Cheuk Nang Plaza to ITC Properties for HK$800 million, 9 per cent lower than the asking price, a filing with the Hong Kong Stock Exchange says.  

3:30pm: Silverman Holdings is Hong Kong’s top percentage gainer today, up 23 per cent to HK$1.37 on volume of 44 million shares. The textiles group has issued a statement denying knowledge of reasons for the unusual share price movement. 

Xinyi Glass has dropped 3.3 per cent to HK$3.76 despite announcing first half profits growth of 24 per cent, having chosen this moment to break news of a proposal to spin off its Hong Kong auto glass retail business for separate listing on the GEM board.

3:14pm: The Hang Seng Index has drifted sideways is currently 0.89 per cent up to 24,568.04, while the H-share index remains down by 0.47 per cent at 11,178.41. 

3:12pm: The Shanghai Composite Index closed 1.68 per cent lower at 3,663 after recovering from a 5 per cent slump in morning trade. The CSI 300 Index of large-cap stocks finished 0.2 per cent down at 3,811.09.

The volatility in Shanghai can be seen in this one-day chart. Please click to enlarge.

3:12pm: The Shenzhen Composite Index fell 2.24 per cent to close at 2,111.70, while the ChiNext Board was 3.78 per cent lower at 2,581.96.

The volatility in the Shenzhen market could be seen in this one-day chart. Please click to enlarge.

2:48pm: Evergrande Real Estate Group is one of Hong Kong’s best performing stocks today, climbing 5 per cent to HK$5.32 with turnover over HK$1 billion – but this six-month view (chart below, click to enlarge) shows some distance remaining to the summit. 

Overnight, the company declared it had repurchased 167 million shares yesterday at between $4.92 and $5.36 each in transactions totaling HK$863 million.

 

2:40pm: The Shenzhen Composite Index is weaker by 1.86 per cent at 2,119.99, while the ChiNext Board is 3.24 per cent lower at 2,596.53.

2:40pm: The Shanghai Composite Index is down 2.06 per cent to 3,648.79. The CSI 300 Index of large-cap stocks is slightly off by 0.4 per cent to 3,803.29

2:40pm: The Hang Seng Index rose 1.05 per cent to 24,607.68, while the H-share index is 0.53 per cent lower at 11,171.14   

2:36pm: Credit Agricole research report.

“The renewed selloff in the Chinese stock market brought global growth concerns back on the table, presumably complicating Fed’s task.

In addition, the US durable goods data released yesterday did little to lift market uncertainty with the upside surprise for June partly reflecting downside revisions for May and hence unlikely to have strong positive impact on the GDP print.

Gloomier inflation outlook presumably means less aggressive Fed tightening from here. That weighs on US dollar especially against low-yielding currencies like euro, Swiss Franc and Japanese yen."

Credit Agricole forecasts on exchange rates. Please click to enlarge.

2:01pm: Macau casino stocks are sliding in Hong Kong after Nomura analysts predicted July gross gaming revenue would drop 35 per cent year-on-year.

While the forecast HK$17.2 billion GGR would be an 8 per cent improvement over June, Nomura remained cautious based on weak growth and lack of demand despite ample supply. 

MGM China drops 3 per cent to HK$15.42, Sands China loses 2.3 per cent to HK$31.80, Wynn Macau falls 2.1 per cent to HK$15.02, SJM Holdings slips 1.1 per cent to HK$8.52, and Galaxy Entertainment eases 0.4 per cent to HK$33.50.

1:59pm: The Shenzhen Composite Index fell 3.01 per cent to 2,095.14, while the ChiNext Board has fallen 4.1 per cent to 2,573.36.

1:59pm: The Shanghai Composite Index is down 2.63 per cent to 3,627.42. The CSI 300 Index of large-cap stocks is off 1.3 per cent to 3,769.25.

1:58pm: The Hang Seng Index has trimmed its gains and is up 0.89 per cent at 24,568.22, while the H-share index has given up its gains for the day and is now down 0.48 per cent to 11,177.12.  

1:50pm: China Eastern shares weak despite Delta deal. For more on story, click here.

1:35pm: Blue chips HSBC Holdings and AIA are leading the way on the Hang Seng Index, contributing 51 and 50 points respectively to keep the index securely in positive territory. Each has gained over 2 per cent today. 

The H-shares index continues to be supported by oil majors Petrochina and Sinopec, adding 22 and 10 points respectively. Likewise, CNOOC is the clear leader on the red chip index, contributing 13 points. 

Ping An Insurance is the main drag on both the Hang Seng and H-shares indices, shaving off 23 and 30 points respectively. The stock is down 2.12 per cent to HK$46.15 with turnover of HK$2.2 billion so far.

1:17pm: The Hang Seng Index is up 1.19 per cent at 24,641.2, while the H-share index is up 0.14 per cent to 11,246.63.   

1:08pm: The Shenzhen Composite Index is down 1.61 per cent to 2,125.34 at the start of afternoon trading, while the ChiNext Board has fallen 2.9 per cent to 2,605.55.

1:08pm: The Shanghai Composite Index dropped 1.63 per cent to 3,664.87 at the start of afternoon trading. The CSI 300 Index of large-cap stocks is down 0.91 per cent to 3,783.98. 

1:08pm: In Hong Kong, the biggest percentage mover with turnover of HK$50 million or more is Beijing Capital Land. The mainland real estate group is down almost 8 per cent to HK$3.74 after it forecast a 20 to 30 per cent decrease in profits for the half before today’s trading.

Share price comparison between Beijing Capital Land (Orange line) and Hang Seng Index (Purple line). Click to enlarge the graph.

1:00pm: Heng Koon-how, FX strategist of Credit Suisse private banking: 

“It is uncertain what an immediate band-widening will achieve, given that it will increase volatility for onshore yuan’s FX regime, right at a time when there are major concerns and volatility in the onshore Chinese equity market.

This may have the contrary effect of injecting further unnecessary volatility and uncertainty into Chinese financial markets, undermining the authorities’ best efforts to stabilize them. 

The underlying conditions for a band-widening are very different compared to the previous band-widening in March last year.   

Current conditions in the USD/CNY market are very different. Since mid-April, both the USD/CNY spot rate and daily central parity fixing rate have held relatively constant around 6.20 and 6.11, respectively.

There is no excessive one-sided trading activity. In fact, the onshore yuan spot rate is now trading on the weaker half of the daily trading band. 

Needless to say, the probability of a band-widening over the long run is high. However...we believe the near-term benefits of a band-widening are questionable."

Click chart to enlarge.

12:06pm: The Hang Seng Index rose 1.52 per cent to close at 24,721 in the morning session while the H-share index edged up 0.40 per cent to 11,275.  

11:57am: This twelve-month view shows the cyclical and choppy performance of oil stocks, as Shanghai-listed Petrochina (purple) and Sinopec (blue) break away from their Hong Kong counterparts (orange and green respectively) and the Hong Kong-listed red chip China National Offshore Oil Corporation (red) late last year amid increasing volatility in mainland markets.

Click on chart to enlarge.

11:39am: The Shenzhen Composite Index retreated 1.3 per cent to finish morning at 2,131.93, while the ChiNext Board shed 2.2 per cent to 2,625.05.

11:34am: The Shanghai Composite Index dropped 1 per cent to end the morning session at 3,688.48, after the key benchmark tumbled more than 4 per cent at one stage.

The CSI 300 Index of large-cap stocks slipped 0.21 per cent to 3810.65.

11:30am: Grim news on commodities prices from index maker S&P Dow Jones Indices.

The latest leg down for the S&P GSCI - down 13.6 per cent month-to-date through July 27, 2015 – takes it to a 13-year low.

July 2015 is the seventh worst performing month in the history of the S&P GSCI that goes back to January 1970.

Every single one of the 24 commodities is negative for the month except lean hogs.

Throughout the history of the index, 23 commodities have been negative together in a month only once in September 2008 and all 24 were negative together only once in the following month of October 2008.

If the index were to fall back to the bottom before 2002, which happened on December 21, 1998, it has another 32 per cent to fall.

Click on chart below to enlarge. 

 

11:26am: Onshore spot yuan is trading at 6.2084 against the US dollar, stronger by 7 basis points from Monday's close. The offshore yuan stands at 6.2164, stronger by 27 basis points from the Monday finish.

11:20am: The Shanghai Composite Index continued to trim its losses from Tuesday's trading as it is now down by only 1.13 per cent to 3,683.44, after tumbling as much as 4 per cent at one stage.

The CSI 300 Index gave up 0.42 per cent to 3,800.

11:21am: The Shenzhen Composite Index also pared its losses, retreating 1.65 per cent to 2,124 and the ChiNext Board declined 3 per cent to 2,599.55.

11:19am: Hong Kong dollar is trading Tuesday at 7.7506 to the US dollar, near upper end of the currency peg. Euro/dlr weaker by 0.12 per cent at 1.1075. Dlr/yen at 123.46, stronger by 0.17 per cent. Pound/dlr stronger by 0.03 per cent to 1.5564. Australian dollar to US dollar stronger by 0.36 per cent to 0.7295.

11:18am: The Hang Seng Index rebounded by rising 1.75 per cent to 24,778.47.

Only two out of 50 companies in the key benchmark were trading in the red, with footwear retailer Bell International and oil giant PetroChina leading the gainers.

The H-share index rose almost 1 per cent to 11,339.11, driven by a 5 per cent hike seen in both electric carmaker BYD and Haitong Securities. 

11:00am: About 900 companies in Shanghai and Shenzhen suspended trading on Tuesday after reaching the daily downside limit of 10 per cent.

All 13 lenders were higher, with Minsheng Bank leading the sector, rising almost 5 per cent.

10:45am: Hong Kong stocks reversed early losses, rising 0.4 per cent to 24,449. The H-share Index of mainland companies retreated 0.51 per cent to 11,173.

10:43am: The Shanghai Composite Index pared its losses but is down 2.8 per cent to 3,621.33. The CSI 300 Index of large-cap stocks also traimmed its decline by falling 2.25 per cent to 3,733.04.

10:43am: The Shenzhen Composite Index recouped some of its losses by giving up 3.51 per cent to 2,084.61, while the ChiNext Board declined 4 per cent to 2,576.03.

10:39am: China’s support measures crumble as Shanghai stocks dive 8.5 per cent in biggest daily drop for 8 years. For more on the story, click here.

10:24am: Rabobank Morning Call: 

“In China we saw an 8.5 per cent collapse in equities. The trigger was a suggestion the government might roll back support measures, underlining the view that recent stability had been artificial. (And note industrial profits data were -0.3 per cent Year on Year yesterday, hitting the E side of P/E ratios; worryingly, there is also still an extremely large degree of margin lending yet to be unwound, although estimates vary due to ‘shadow’ lending schemes.)

This leaves China with a huge quandary. What does a People’s Bank of China “Whatever it takes” look like when it is already using a bazooka of 5-10 per cent of GDP?

Perhaps tellingly, CNH (Chinese offshore yuan rates) slipped 2 big figures to a low of 6.2287 before recovering, although CNY (Chinese onshore yuan rates) remained totally unmoved...as free-floating currencies usually do during 8.5 per cent down days in equity markets!”

10:10am: Rusal, the world’s largest aluminium producer, says in HKEx filing it will consider cutting its output capacity by up to 200,000 tonnes in the next 12 months and has no plan to restart smelters idled in 2013.

It expects flat production this year after average selling price fell 7.7 per cent in 2Q from 1Q as commodities prices weakened amid China’s economic slow-down.  

For chart on Rusal, click to enlarge.  

10:07am: Hang Seng Index shed 0.46 per cent to 24,239, with HK$22 billion worth of shares exchanging hands.

The H-share index dropped 1.75 per cent to 11,034.17, dragged by a 5 per cent drop seen in the share price of wind power producer Longyuan Power.

10:05am: The Shenzhen Composite Index falls 5.64 per cent to 2,038.41, while the ChiNext tumbled 6.48 per cent to 2,510.05.

10:05am: Shenzhen composite three-month share price movement through July 28 illustrating market volatility, Click on chart to enlarge. 

 

10:04am: The Shanghai Composite Index gave up 4.37 per cent to 3,563.86. The CSI 300 index of large-cap stocks dropped 4.23 per cent to 3,657.65.

10:04am: Shanghai composite three-month share price movement through July 28 illustrating market volatility, Click on chart to enlarge. 

 

 

10:01am: People’s Bank of China will issue seven-day reverse repurchase agreements worth 50 billion yuan today in an attempt to inject more liquidly into the system, state-backed Shanghai Securities News website reports citing sources.   

9:55am: In Hong Kong, shares in technology giant Lenovo and oil major Sinopec dropped to their lowest level in 52 weeks, giving up 1.5 and 1.04 per cent respectively.

PetroChina fell moderately by 0.27 to HK$7.45, while offshore oil driller CNOCC rose 0.75 per cent to HK$9.44, after the Brent, the international crude benchmark, dropped more than 2 per cent to US$53.47 per barrel, the lowest level n four months.

9:55am: Charts of Sinopec and Lenovo. Please click on graph to enlarge.

 

9:52am: China Eastern Airlines dropped almost 10 per cent in early Hong Kong trading but has recovered to be 1.3 per cent down at HK$6.81. In Shanghai, the stock has slipped 7.6 per cent to 11.08 yuan.

9:52am: Passing through some turbulence: China Eastern Airlines shares in Shanghai (green) and Hong Kong (blue) tracking against the Shanghai Composite Index (purple) and Hang Seng Index (orange) over the past three months. Click on graph to enlarge.

 

9:50am: Insurance shares were a mixed bag, with China Life and China Taiping rising 2 and 0.2 per cent respectively.

Ping An Insurance and New China Life in Shanghai were lower by 2 per cent each, while their Hong Kong traded counterparts slid by more than 3 per cent.

9:46am: DBS morning report on China's stock market. 

"The illusion of calm was shattered when the Shanghai Composite Index fell by 8.5 per cent yesterday.

Notably, the stock market plunge took place roughly two weeks after the authorities introduced a raft of stopgap measures to bolster sentiment.

With these measures distorting prices, some volatility is inevitable. Concerns on China further eroded the already weak sentiment, sending global stock markets lower. 

Onshore and offshore yuan rates, which had been converging, are now diverging. China is likely to be a lingering concern for the market.

If speculation mounts on further support especially a weaker on shore yuan to the economy, offshore yuan market rates may stay elevated relative onshore yuan rates, reversing the norm seen in the prior few years." 

9:44am: The Hang Seng Index fell slightly by 0.12 per cent to 24,323.28, with HK$9 billion worth of shares exchanging hands. The H-share Index retreated 0.65 per cent to 11,157.29.

9:43am: Banks in Shanghai withstand the market-wide weakness, rising in a range between 1 to 3 per cent. Bank of China rose 2.81 per cent to 4.76 yuan, the best performer in the sector.

9:40am: If the Shanghai Composite falls below the 3,600-point mark, it will be the lowest level since March 20, 2015.

Despite recent sell-offs, the benchmark has managed to stay in positive territory, rising about 12 per cent so far this year.

9:32am: The Shanghai Composite opens over 4 per cent lower at 3,568.40. The CSI 300 Index of large-cap stocks sank 3.35 per cent to 3,690.97.

9:32am: The Shenzhen Composite tumbles 4.66 per cent to 2,058, and the ChiNext plunged 4.55 per cent to 2,561.44.

9:30am: Three Shanghai listed  A-share companies have applied to resume trading on Tuesday while another three applied for suspension of trading. This result in the number of suspended trading companies in Shanghai staying at 80, representing 7.5 per cent of the total.

In Shenzhen, there are a total of seven listed companies who say they will resume trading on Tuesday while another two applied for suspension. This will leave 348 firms in Shenzhen in voluntary suspension, representing about 20 per cent of the total.   

9:26am: The CSI 300 index futues for August dropped 2.98 per cent to 3,647.8 at 9 am, while the September contracts fell 2.87 per cent to 3,593.8.

9:23am: Hang Seng Index down 0.34 per cent or 82.06 points to 24,269 in pre-opening trade. 

9:17am: People’s Bank of China on Tuesday sets the mid-price of onshore yuan trading at 6.1154, stronger by 22 basis points against the US dollar compared to its Monday fix.

9:15am: The People’s Bank of China says Tuesday it continues to adopt a prudent monetary policy in the second half of this year and aims to lower the cost of financing.

9:13am: China Eastern Airlines will resume trading today in both Hong Kong and Shanghai after it announces Monday a share placement to raise HK$3.47 billion by placing the new shares to Delta Airlines. The shares last closed at HK$6.9 on July 22, before its suspension from trading from July 23 pending announcement of the deal.

9:03am: On the main board of the Hong Kong stock exchange, CT Environmental Group announces expected profits growth for the half, while Beijing Capital Land and Changgang Dunxin Enterprise Company expect profits to contract. 

Losses are projected by ASR Logistics Holdings and Ko Yo Chemical. Yue Da Mining Holdings and China Billion Resources each forecast significant increases in losses – the latter remains suspended from trading pending negotiations with creditors over a debt restructure.

8:59am: China Securities Regulatory Commission is searching for more clues regarding grey margin finance activities through on online share-trading platforms developed by other financial information technology services providers.

Internet-based peer-to-peer "fund matching" firms that allow investors to borrow money to bet on stocks are widely seen as the breeding ground of illegal margin finance and are blamed by many for causing the market freefall. 

8:53am: Both Japanese and Australian markets dropped at the open on Tuesday, extending the weakness in China market after the two exchanged were closed on Monday when the Chinese stocks tanked. 

At 8:48am, the Nikkei 225 Index gave up 0.92 per cent to 20,163.37, while the S&P/ASX 200 index was down 0.86 per cent to 5,541.7.

8:50am: CSRC also investigating activities by some individual investors who are allegedly involved in “malicious short-selling,” Deng says. 

8:47am: China Securities Regulatory Commission (CSRC) rejects speculation Beijing will phase out its market rescue measures, adding that the China's official margin lender has no plan to stop its efforts to prop up the market and will seek opportunities to buy more shares, CSRC spokesman Deng Ge says.  

8:41am: Reorient morning report on China's equity market.

“Reorient’s equity trading team observes that the Chinese government’s intervention prevented the market from finding its own bottom.

At some point, weak hands have to capitulate and strong hands have to move in. Markets, like civilizations, do not really recover from declines: instead, they are replaced by different people.

We see support from the Chinese authorities around the 3,300 level on the SHCOMP, that is, right around its 2014 close. We remain extremely cautious at present levels. 

The rise in the dollar and the renewed crash in oil prices aren’t the only problems bedeviling China’s market, to be sure.

But this exercise in decomposition of Chinese equity returns makes clear that external deflationary factors are an important influence on equity returns. 

 The fact that China continues to grow (and industrial profits eked out a small margin of growth) despite these deflationary headwinds is an encouraging sign. But a robust recovery of Chinese equity prices probably will require strong action to correct the deflationary bias, and clear signals to the market, on the part of the People’s Bank of China.” 

8:07am: China stock rout depresses Wall Street, global equities. For story, click here.

7:45am: Below is the three-month chart of Hong Kong's Hang Seng Index up to the close yesterday. Please click on the chart to enlarge. 

 

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