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. 4:09pm: The Hang Seng Index finished 1.53 per cent lower at 22,409.62. The H-share Index fell 2 per cent to close at 10,195.05. 3:53pm: Sun Hung Kai & Co has drifted 3.09 per cent to HK$5.01 in trading today. The financial services firm put out its interim results after yesterday’s closing, announcing 9 per cent growth in operational revenue to HK$2.169 billion. Profit was HK$3.631 billion against HK$610 million for the corresponding period last year, HK$3 billion of which was attributed to the sale of Sung Hung Kai Financial Group to a subsidiary of Everbright Securities. 3:45pm: China stocks this week (top) and today (bottom): Shanghai Composite Index (orange), Shenzhen Composite Index (green), CSI 300 (purple) and ChiNext (blue). Click to enlarge. 3:41pm: Standard Chartered Bank report: “Onshore yuan (CNY) devaluation against the USD likely triggered further capital outflows from China in August. Monthly capital outflows had already risen to a monthly record in July. Based on FX purchases as well as trade and FDI data, we estimate that non-FDI outflows amounted to about US$70 billion in July. Following the CNY devaluation in mid-August, there are signs that capital outflows increased further and that the People’s Bank of China (PBoC) may have intervened heavily (selling FX) to stabilise the exchange rate. A loss of FX reserves drains domestic liquidity. The PBoC will need to replenish liquidity in order to maintain financial conditions conducive to growth stabilisation. We expect the central bank to resort to cutting the reserve requirement ratio (RRR) soon. So far, the PBOC has avoided using broad-based tools such as RRR cuts. Instead, it injected a net 150 billion yuan into the banking system through reverse repos and 110 billion yuan through the medium-term lending facility this week. However, these measures failed to bring down the 7-day repo rate. The IMF recently suggested there is room for further RRR reduction, and that open-market operations can be used to partially offset the excess liquidity caused by the RRR cut. We think the central bank may well take this approach, as liquidity losses from capital outflows could last for a while.” Click on chart to enlarge. 3:20pm: The Shanghai Composite Index closed down 4.27 per cent at 3,507.74. The CSI 300 Index finished 4.57 per cent down at 3,589.54. 3:20pm: The Shenzhen Composite Index fell 5.39 per cent to close at 2,039.4. The ChiNext Index finished 6.65 per cent lower at 2,341.95. 3:15pm: The Hang Seng Index is 1.97 per cent weaker at 22,308.01. The H-share index is 2.6 per cent lower at 10,131.89. 3:12pm: Civil engineering firm Build King Holdings has dropped 9.52 per cent to 38 HK cents today. Its interim results, released after yesterday’s closing, showed revenue growth of 70 per cent to HK$2.296 billion and profits up 53 per cent to HK$38.653 million. Dongwu Cement has fallen further, by 15.76 per cent to HK$1.39, having reported a 32 per cent decrease in turnover and a net loss of 14.129 billion yuan (HK$17.12 billion), up from 1.597 billion yuan (HK$1.93 billion) in the corresponding period of last year. 3:11pm: Digital entertainment company A8 New Media reported a 314 per cent first half profit increase coming from a small base and reaching 5.8 million yuan (HK$), but group revenue dropped 45 per cent. The stock has fallen 13.79 per cent to 50 HK cents today. 2:40pm: Sino-Ocean Land has fallen 4.14 per cent to HK$4.17 on its first half financials, profit slipping 1.95 per cent to 2.195 billion yuan (HK$2.66 billion) and revenue down 15 per cent. 2:38pm: Henderson Land has surged ahead since early trading, going from negative territory to 4.09 per cent up at 47.05, leading the Hang Seng gainers. Longfor Property is down 3.97 per cent to HK$9.68 after reporting its interim results which saw net profit fade by 4.3 per cent to 3.836 billion yuan (HK$4.65 billion). 2:11pm: The Hang Seng Index is off an intraday low and is now trading sideways at 22,209.74, down 2.41 per cent. The H-share Index has recovered some ground but is still down 3.17 per cent at 10,073.39. 2:11pm: The Shanghai Composite Index has rebounded from an earlier 5 month low and is now trading at 3,548.39, down 3.16 per cent for the day. The CSI 300 Index is 3.33 per cent lower at 2,636.21. 2:11pm: The Shenzhen Composite Index is also trying to stage a recovery and is now 3.09 per cent weaker at 2,088.80. The ChiNext Index is 3.76 per cent down at 2,414.46. 2:09pm: HSBC on Friday’s PMI data: “After a disappointing set of activity data in July, economic recovery seems to have lost steam further in August. The August flash PMI fell to the weakest level since the global financial crisis. Both domestic and external demand weakened simultaneously. The poor export orders data are more or less in line with expectations, given the challenging external demand environment. Rather it is the pace of the slowdown in domestic demand that is more worrying and points to the underlying challenges facing the manufacturing sector. The biggest challenges remain in the elevated level of high real interest rate (PPI based real interest rate rose more than 200bps since 2014), bank's rising risk aversion and weak demand outlook. This has already started to weigh quite heavily on labour demand, as the employment index fell to the weakest level since January 2009. We forecast another 25bps policy rate cut and 100bps reserve ratio cut in Q3. But it will take a more concerted effort from policy makers to improve business sentiment and improve support from growth industries. Both monetary and fiscal policy makers need to move more swiftly to demonstrate easing intention and anchor market expectations. They should also move to lower banks' various funding rates in order to encourage lending and make way for more municipal bonds and possibly financial bond issuance to support infrastructure investment.“ 2:07pm: Goldman Sachs on Friday’s manufacturing PMI reading being the lowest in 77 months: “Interpreting the reading of the Flash PMI is tricky as this supposedly more timely indicator often lags sequential growth of hard activity data such as IP of the same month. While the flash reading can be quite different from the final reading and other hard activity growth indicators, the sharp fall does renew uncertainties about recent activity growth. This flash reading can also be particularly disappointing if we take into account the possible front-loading of production ahead of supply-side shutdowns for major international events (the World Athletic Championship and WWII Memorial). With such a large geographic area under restrictions for the rest of the month we expect August sequential activity growth to be on the weak side though yoy growth may hold up because of an exceptionally low base from last August (because of low temperature and Youth Olympics restrictions around Nanjing). We expect policy easing to continue until growth shows a clearer and more sustainable rebound and policy makers get comfortable with achieving their “around 7 per cent yoy” target for official real GDP growth for this year.” 1:18pm: The Hang Seng Index is down 2.44 per cent at 22,201.55. The H-share Index is 3.07 per cent weaker at 10,083.34. 1:17pm: Are Macau casino stocks n the ropes? For more on story, click here. 1:15pm: The Shanghai Composite Index continued to drop into the afternoon and is now down 3.08 per cent at 3,551.54. The CSI 300 Index also extended its losses and is trading 3.13 per cent weaker at 3,643.85. 1:15pm: The Shenzhen Composite Index is 4.25 per cent lower at 2,063.86. The ChiNext Index is 5.19 per cent off at 2,378.62. 1:12pm: Pacific Andes shares fell 33.33 per cent to 16 HK cents on their resumption of trading to be this morning’s top loser. According an exchange filing, the seafood processing giant is being probed by Singapore regulators. Click here to read more. 1:03pm: For midday China and Hong Kong stock report, click here. 1:02pm: China Resources post huge loss. For more on story, click here. 12:22pm: Onshore yuan trades at 6.3986 to the dollar by midday, weaker from the previous close at 6.3875. Offshore yuan trades at 6.4503 to the dollar midday, weaker from the previous close at 6.4385. 12:08pm: The Hang Seng Index closed at midday at 22,230.06, down 2.32 per cent or 527.21 points. The China Enterprises Index (H-share index), which tracks Hong Kong listed Chinese companies, closed at 10,094.77, down by 2.96 per cent or 307.95 points. 11:40am: The Shanghai Composite Index closed the morning session at 3,553.82, down 3.04 per cent, or 111.47 points. The CSI300 index of Shanghai-Shenzhen large cap stocks finished the morning session at 3,646.45, down 3.06 per cent or 115 points. 11:40am: The Shenzhen Composite closed the morning session at 2,072.35, down 3.86 per cent, or 83.14 points. The NASDAQ-style ChiNext Price Index slides 3.86 per cent, or 83.14 points to trade at 2,388.71. 11:39am: The Hang Seng Index trades at 22,240.09, down 2.27 per cent or 517.38 points. The China Enterprises Index (H-share index) tracking Hong Kong listed Chinese companies, trades at 10,121.20, down by 2.71 per cent or 281.52 points. 11:08am: Hong Kong dollar is trading Friday at 7.75 against the US dollar, near upper end of the currency peg. Euro/dlr strengthened by 0.3 per cent at 1.13. Dlr/yen at 123.08, weakened by 0.26 per cent. Pound/dlr stronger by 0.01 per cent to 1.5. Australian dollar to US dollar weakened by 0.48 per cent to 0.73. 11:07am: Yuan unlikely to fall further, says Hong Kong financial services chief. For more on story, click here. 10:55am: Among Hong Kong’s most heavily traded stocks today, only mainland telecoms are providing a glimmer of light. China Mobile has gained 0.92 per cent to HK$99.05, with China Unicom up 1.53 per cent and China Telecom lifting 3.22 per cent. The rest of the top 20 by turnover are trading down. Tencent drops 2.94 per cent to HK$132.20 with HK$1.65 billion in shares changing hands. It’s followed by Hong Kong Exchanges and Clearing, down 3.73 per cent to 188.40, its lowest intraday level since March 30. 10:43am: The Hang Seng Index trades at 22,345.98, down 1.81 per cent or 411.49 points. The China Enterprises Index (H-share index), which track Hong Kong listed Chinese companies, trades at 10,180.35, down by 2.14 per cent or 222.37 points. 10:43am: The Shanghai Composite Index trades at 3,626.37 points, weaker by 1.04 per cent or 37.92 points. The CSI300 index of Shanghai-Shenzhen large cap stocks trades at 3,722.01, down by 1.05 per cent or 39.44 points. 10:43am: The Shenzhen Composite Index trades at 2,110.24, down 2.1 per cent, or 45.25 points. The NASDAQ-style ChiNext Price Index slides 2.98 per cent, or 74.72 points to trade at 2,334.09. 10:28am: Ping An Insurance posted a net profit of HK$34.65 billion, an increase of 62.2 per cent. The core life insurance business line grew 44.3 per cent on the back of 800,000 new agents and increased sales productivity. Ping An’s share price has dropped 1.51 per cent to HK$39 this morning as the Hang Seng declines generally. To read more about the company’s results, click here. 10:28am: Henderson Land reported a 4 per cent net profit increase to HK$9.85 billion on HK$11 billion revenue, as gains on fair value of investment properties almost matched operational profits. Hong Kong property sales were up 27 per cent but hotels did it tougher with increased competition and reduced visitor numbers. Henderson’s share price has slipped 0.11 per cent to HK$45.15 today. To read more about the company’s results, click here. 10:28am: Li & Fung, the supply chain and consumer goods sourcing giant, suffered a 19.7 per cent drop in operating profit to HK$1.41 billion for the half, fueled by major currency depreciation against the US – in which most of its business is denominated – and declining demand in Europe. L&F’s shares have picked up 3.11 per cent to HK$5.64, leading the Hang Seng gainers this morning. Click here to read more. 10:12am: Danger ahead as the Hang Seng index approaches the ‘Death Cross’, a technical warning light that flashes when the 50 day moving average crosses and drops below the 200 day moving average. According to Bloomberg, that’s happened six times in the past 10 years, with the index then falling an average of more than 15 per cent through the next market low. In the graph below, the Orange line is the Hang Seng index, the Blue line is the 50 day moving average and the yellow line is the 200 day moving average. Click to enlarge chart. 9:51am: The flash China General Manufacturing PMI hit a 77 month low for August at 47.1. This compares with 47.8 in July. A number below 50 signifies the sector is contracting. The flash China General Manufacturing Output index is 46.6 for August, a 45 month low. It was 47.1 in July. Click to enlarge chart. 9:40am: The Hang Seng Index opens at 22,318.87, down 1.82 per cent or 442.6 points. The China Enterprises Index (H-share index), which track Hong Kong listed Chinese companies, opens at 10156.93, down by 2.93 per cent or 245.78 points. 9:40am: The Shanghai Composite Index opens the morning at 3,631.53 point, down 0.894 per cent, or 32.76 points on Friday’s close. The CSI300 index of Shanghai-Shenzhen large cap stocks opens at 3,737.02, down 0.649 per cent or 24.43points. 9:40am: The Shenzhen Composite Index opens at 2,114.89, down 1.52 per cent, or 32.67 points. The NASDAQ-style ChiNext Price Index slides 0.25 per cent, or 51.39 points to open at 2452.61. 9:34am: Analysts at Lombard Street Research look at the impact of the yuan’s recent move on emerging markets: “A 3 per cent depreciation in the yuan is hardly a game-changer for global markets. But the move could have broader implications, certainly in the near term – not least as Japan and the euro area are firmly in easing mode. Whether or not that was the trigger, China has joined the currency war at a time of weak global growth. At least in part, Beijing’s decision seems to rest on deepening concerns over the economy. China’s evolving currency regime may help the overvalued CNY stabilise at an ‘adaptive and equilibrium’ level, in PBOC parlance, along with a growing role for markets. On the other hand, this not only unleashes pent-up CNY volatility, but implies a faster transmission of domestic policy shifts abroad – particularly to emerging markets (EMs). Beijing’s move can also be seen as an ‘EM trilemma’-type response to tighter US monetary conditions. In all, as China is a vital growth engine for other EMs, the macro repercussions of the new CNY regime are set to complicate policymakers’ reaction functions and amplify EM differentiation. China’s currency shift amplifies the EM ‘slow burn’ challenges. On the one hand, incipient – albeit gradual – US monetary tightening will not make refinancing conditions any more favourable. On the other, a sustained trend of (orderly) CNY depreciation should cushion the slowdown that inevitably comes with China’s rebalancing. However, in the short term it could also be perceived as a sign of persistent underlying weakness, particularly if the data fail to show meaningful improvement, thereby contaminating the outlook for all EMs – irrespective of the Fed’s tactics.” Click on chart below to enlarge. 9:30am: Yuan up for 6th day. For story, click here. 9:13am: ING Morning Call: “We think it was the mention of China that resulted in the FOMC minutes triggering a risk-off re-pricing. Treasuries rallied, stocks sold off and the dollar depreciated. Commodity prices appear to have de-coupled from the dollar, however. Pending greater visibility we think the re-pricing of commodities will continue. In Asia the countries whose financial assets are most vulnerable to selling pressure from falling commodity prices are Indonesia, Malaysia and Mongolia. Disorderly currency depreciation in Indonesia or Malaysia would have global repercussions, in our view." On China, “We got clarity on the amount of Medium-Term Lending Facility of 6-month funds the PBOC injected on Wednesday, CNY 110 billion. It also injected CNY 150 billion via open market operations. We infer from the double-barrel liquidity injection that capital outflows are big and may persist. We think a 50-100bp RRR cut this weekend is a strong possibility. A 50bp cut would inject close to CNY 700 billion. Fiscal stimulus is the government’s main instrument for boosting growth. Yesterday the State Council announced increased corporate income tax cuts for small businesses. It raised the taxable income threshold for qualifying for a 50 per cent cut in corporate income taxes to CNY 300,000 from CNY 200,000. Our view remains that the significant policy stimulus already in place and in the pipeline will support growth at close to 7 per cent in 2H15.” 9:12am: Two Shanghai listed A-share companies resume trading today while no company suspended trading in their stock. The number of suspended companies in Shanghai is 97 on Friday, representing 9 per cent of the total. In Shenzhen, eleven listed companies say they will resume trading today, while five firms will suspend trading in their shares. Some 252 firms in Shenzhen are in voluntary suspension on Friday, accounting for about 14.57 per cent of total listed companies. 9:04am: The Hang Seng Index futures spot August contract lost 400 points, or 1.76 per cent to 22,266. 9:03am: Shanghai Composite Index inches down 0.17 points to 3,664.12 at the preopening session. CSI300 Index tracks largest stocks in Shanghai and Shenzhen loses 0.37 points to 3,761.08. 8:36am: SG report – Europe PMI “The manufacturing PMI should soften from 52.4 to 51.6 in August, with only France eking out a small gain in its manufacturing PMI compared to its low reading in July. The services PMI should increase from 54.0 to 54.1 on the back of small rises in the estimates for France and Italy. The composite PMI is expected to show a modest decline, from 53.9 to 53.6. Confidence in the manufacturing sectors in Germany and France is struggling to take off. This likely reflects weaker Chinese import demand, heightened uncertainty (Greece/China) in Germany and insufficient progress with reform in France. Looking ahead, we expect PMIs to hover around current levels in the coming months, with modest potential for upside surprises. Our view is that the current recovery in the euro area comes on the back of lower fuel prices, which have boosted households’ disposable income. Exports also started to respond to the euro’s weakness in second quarter, but we expect the contribution to GDP growth from net exports to be modest. Indeed, the weakness in the euro will help boost export market shares, but the gains cannot entirely offset the weakness in global trade. In particular, the flow of news from China should have some negative effects on PMIs going forward. As a reminder, China represents around 6 per cent of total euro area exports, which amounts to around 1.3 per cent of euro area GDP.” 8:33am: For roundup on Wall Street as global stocks slump over worries about China growth, click here. 8:27am: SG Morning Call: “Overnight, Prime Minister Tsipras announced its government's resignation. Consequently, Greek President Pavlopoulos will need to investigate whether somebody else is in position to form a government. In all likelihood, he will fail to find a Prime Minister able to win the subsequent confidence vote, will thus need to appoint the head of the Supreme Court as an interim Prime Minister, and call for new elections to be held over the next 30 days. Importantly, we believe that this development will slow the Greek administration and could even prevent the passing of the bailout-related legislation (i.e. pension reform, the €50bn asset fund, product market regulation, fiscal measures) until after the elections. Turning to China, we expect the flash manufacturing PMI to rebound from the depressed level of 47.8 in July to 48.5 in August, which, however, still indicates weak growth momentum. On the policy front, the People’s Bank of China stepped up net liquidity injection to 260 billion yuan this week (equivalent to about 20 basis point of Reserve Requirement Ratio (RRR) cut) If FX intervention (selling FX reserves) continues, RRR cuts will be inevitable. We see further 100 basis point cuts this year.” 8:25am: The one day chart of the mainland China market. Shanghai Composite Index (orange) and the Shenzhen Composite Index (purple). The percentage at the end of the chart represents the different from the opening, not from previous close. Click to enlarge chart. 8:25am: The one day chart of the Hong Kong market. Hang Seng Index (orange), H-share index (purple). The percentage at the end show the differences from the opening, not the previous close. Click chart to enlarge. 8:23am: Beijing-based Sino-Ocean Land Holdings (yellow) will announce interim results today. Company executives will meet the media at 3:30 pm. It closed on Thursday at HK$ 4.35, down 4.396 per cent. Its share price has generally traded in line with the Hang Seng Index (purple) the past three months. Click to enlarge the chart below. 8:20am: Hong Kong listed California toy manufacturer Playmates Toys (yellow), part of Hong Kong-based Playmates Holdings and the manufacturer of popular brand toys including Teenage Mutant Ninjia Turtles, will announce interim results today. It closed on Thursday at HK$ 1.48, down 2.63 per cent. Its share price outperformed the Hang Seng Index (purple) since early August, but underperformed the index the previous two months. Click to enlarge the chart below. 8:17am: Mainland China developer Longfor Properties (yellow) will announce interim results today. Company executives will meet the media at 2:00 pm. Its shares closed on Thursday at HK$10.08, down 1.95 per cent. Its share price underperformed the Hang Seng Index (purple) the past three months. Click to enlarge the chart below. 8:15am: Huatai Securities (yellow), mainland China's largest brokerage by trading volume, will announce interim results today. Its shares closed on Thursday at HK$14.72, down 3.7 per cent. Its share price has underperformed the Hang Seng Index (purple) the past three months. Click to enlarge the chart below. 8:13am: China Unicom, one of the country’s biggest telecom companies, will announce interim results today, with executives meeting the media at 4:30 pm. It closed on Thursday at HK$10.48, up 1.55 per cent. Its share price underperformed the Hang Seng Index (purple) the past three months. Click on chart below to enlarge. 8:10am: The world’s largest coal producer in China Shenhua Energy Co. will announce its interim results today. The company closed 3.55 per cent lower on Thursday at HK $14.14. Its share price underperformed the Hang Seng Index in the last two months. Click to enlarge the chart below. 8:06am: Beer maker China Resources Enterprise will announce its interim result today with top executives meeting the media at 2:30 pm. The company closed 1.46 per cent lower on Thursday at HK $23.55. It share price has risen since April when it sold off its non-beer retail and food business to its parent company, state-owned conglomerate China Resources (Holdings). Its share price underperformed the Hang Seng Index from late May to early June, and then outperformed the index. Click to enlarge the chart below. 8:03am: Brilliance China Automotive (yellow), which has a 50-50 joint venture with German carmaker BMW, will announce interim results today. The executives will meet the media at 5:30 pm. It closed on Thursday at HK$ 9.43, down 3.78 per cent. Its share price has underperformed the Hang Seng Index (purple) the past three months. Click to enlarge the chart below. 7:50am: Onshore spot yuan closed Thursday at 6.3875 to the dollar, compared with the mid-price fix of 6.3915 set by the PBOC in the morning and the Wednesday finish of 6.3945.