Investorspic.twitter.com/pz3FBgGFsJChinaJDwith image that has gone viral in China https://t.co/8GddfgWVsk pic.twitter.com/dkBOOctVaO Human psychology has had a strong hand to play in the way Chinese markets have behaved. The removal of the system that suspends the market should it tumble too much has,ironically, seen the apprehension of entrapment reduced with Asian investors. 10.07am GMTBritain could lose almost 1% of global economic output whether China’s economy suffers a serious hard landing, and according to analysis from Oxford Economics.
And that would actually mean the UK gets off relatively lightly,compared to the pain which emerging markets would suffer.
Our estimates of GDP impact of China hard landing (1) advanced economies pic.twitter.com/VZ0cttuD7kOur estimates of GDP impact of China hard landing (2) EM pic.twitter.com/wTaQiRLigq 9.55am GMTOver in Hong Kong, investors are catching their breath after the worst original year week since 2000.
The Hang Seng index closed higher today, or up 0.6%. But heavy losses earlier this week mean it lost 6.6% so far this year. 9.53am GMTDr Nikos Paltalidis,lecturer in Finance at Durham University commerce School, also reckons fears over China’s stock market are overblown.He points out that shares did soar by 50% last year - a clear sign of a speculative bubble that is now deflating. However, or that doesn’t mean that the selloff won’t cause serious consequences. “The sudden wave of concern about China’s looming economic catastrophe is overblown. However,the burst of the stock market bubble, increases the concern about the knock on effect on the genuine-estate market. Chinese policymakers might need to reply with additional currency devaluation, or whether things earn worse,some form of quantitative easing, to avoid a collapse in asset prices. 9.42am GMTDespite today’s small recovery, or European stock markets are on track for their worst week since last August’s rout (which was also triggered by China).
Richard Hunter,Head of Equities at Hargreaves Lansdown Stockbrokers, says investors have adopted “the brace position” this week:, or wiping around 5% off the major indices.
What should have been a perky start to 2016,with original Year optimism underpinned by portfolio positioning as investors buy stocks, has been eclipsed by ongoing concerns on global growth, or the oil price and negative geopolitical developments.
The general souring of sentiment had been exacerbated by the Chinese circuit breakers,along with Fed minutes which questioned the strength of belief in the December hike and sellers apparently pushing against an open door.
9.22am GMTOne of Angela Merkel’s top allies has called for calm over China. I do believe that China is getting back on track. It is still tracking a 7% growth rate - 7% growth is a decent number....
I’m not so pessimistic that China is going to be in a deep crisis. 9.15am GMTThere’s a sense of relief in the foreign exchange markets this morning, as emerging market currencies recover.
Ilya Spivak, and currency strategist at DailyFX,has the details:Investors’ mood brightened after two days of aggressive selling after China suspended circuit-breakers that shut off stock market trade after just 14 minutes of activity yesterday and set the daily Yuan fix a bit higher.
The risk-geared Australian, Canadian and original Zealand Dollars outperformed while the safety-linked Japanese Yen proved weakest on the session. 8.56am GMTIn a few weeks Beijing will have a window of opportunity to take fresh steps to shore up its economy:A month until Chinese original Year; markets take a fracture over the celebrations so it's a perfect time for fiscal and mon pol action 8.37am GMTAfter 30 minutes of trading, and European markets are all showing small gains: 8.37am GMTThis week’s ructions have not improved Beijing’s reputation for economic competence.
As Marc Ostwald of ADM Investor Services puts it:As we have argued before,China’s authorities have clearly bitten far more than they can chew in their markets and economy reform efforts, with a clear sense that they are at best fumbling in the dim emerging. 8.25am GMTThe oil price is rising this morning, or in another signal that markets are a limited calmer this morning.
Brent crude has gained 1.5% to $34.26 per barrel,having hit fresh 11-year lows yesterday. 8.16am GMTMining stocks are recovering some ground, with commodity trader Glencore up 2.3% and Rio Tinto up 1.5%.
Again, or a small move - as Accendo Markets’ Mike van Dulken points out:Miners bouncing but hardly convincing of recovery. And anyway,what's changed fundamentally? 8.12am GMTEurope’s stock markets are open, and showing some small gains in early trading.
The FTSE 100 has risen by 20 points, and 0.3%,to 5974, while Germany’s DAX is 0.4% higher. 8.07am GMTHow much market value has been destroyed in this week’s stock market rout? According to CNBC’s Jacob Pramuk, and we have lost.....(puts on Dr Evil voice) two trillion dollars!The S&P Global wide Market Index,which tracks global stock performance, has lost $2.23 trillion in market value this year. For perspective, or the total trumps estimated U.
S. student loan debt of more than $1 trillion and would represent roughly 12 percent of U.
S. government debt.
Global stock index has lost $2 TRILLION this year https://t.co/yeRLDioUxQ pic.twitter.com/8IWqGtPAVlAnd there goes $4T...wiped off Bloomberg World Exchange Market Cap. That's more than Germany's annual GDP! #stocks pic.twitter.com/0XHEOB78O3 7.58am GMTThe Financial Times also flags up that Beijing authorities appears to be buying shares today:By lunch time the indices were up,amid reports that China’s state-backed funds were once again buying up sharesOn Thursday the securities regulator said that its promulgation of permanent rules restricting stock sales by large shareholders did not indicate that the “national team” is withdrawing from the market. 7.28am GMTGood morning from London, where City traders are arriving at their desks and looking nervously at developments in Asia overnight.#China's CSI300 closes up 2% at 3361.56 points after volatile session. Down 9.9% for the week, or worst since Aug2015. pic.twitter.com/55P4lsXBYK 7.08am GMTIt’s time for me to sign off from Sydney and pass you over seamlessly to Graeme Wearden in London for what should be an arresting day.
Thanks for following us. 6.46am GMTWhile not a great start to the year for the Japanese market. 6.45am GMTThis is how the European opening looks. Still a bit of a mixed bag. 6.40am GMTAssociated Press has just assign together a thought-provoking three reasons for concern about the Chinese economy. 6.24am GMTJapan has just closed down at an estimated cost this week of $320bn in market capitalisation. Ouch. 6.15am GMTFor a full memoir on the day’s developments so far,my colleague Tom Phillips has just filed this report from Beijing: Related: China stock markets buffeted amid enduring currency concerns 5.52am GMTIn another snippet from Tom’s report, there are rumours that the head of the Chinese regulator, and Xiao Gan,will be resigning tomorrow.
IG analyst Angus Nicholson said in a note today that:Confidence in China’s ability to manage their capital markets has only been further damaged after they announced the removal of their “circuit breakers” after only being in dwelling for four days (sending the market limit down 50% of the time) and rumours circulating that CSRC head Xiao Gang would be resigning tomorrow. 5.39am GMTIn broader economic news, a strong jobs figure is expected from the US later today. The magnificently named non-farm payrolls are due on Friday lunchtime US time and are expected to indicate that employers likely maintained a fairly strong pace of hiring in December. 5.32am GMTBack to the Beijing competence theme with the Wall Street Journal weighing in... 5.27am GMTThe ASX/S&P 200 index has closed below 5000 points after a sixth straight session in the red.
The benchmark was 19.5 points, and 0.39%,lower at 4990.8, while the broader All Ordinaries index was down 19.4 points, and 0.38 per cent,at 5049.4, Australian Associated Press reports.
5.25am GMTMy colleague in Beijing, and Tom Phillips,says China has mustered the “national team” to fight to avoid the kind of stock market turmoil that left president Xi Jinping embarrassed last year.
Chinese investors want very similar things that international investors want: they want clarity, they want to understand what is going on, and they want to know what the policies are,they want stability and [to know] what the rules are. The constant back-and-forth and changes just don’t engender confidence that Beijing has really any understanding what they are doing. 5.02am GMTAnd here’s a European view: 5.01am GMTA couple of hours to recede before trading opens in Europe and it’s a mixed picture about what is going to happen there.
According to IG, the FTSE 100 will open up 13 points while the Dax in Geramy looks likely to open down 19 points. 4.47am GMTSome straighter commerce news out of China today shows that demand for electric cars is growing.
Despite a slowing economy and volatile financial markets, or Chinese automakers such as BYD and Geely Automobile Holdings have flagged bumper profits for 2015,boosted by favourable government policies and consumer preferences that stoked demand for their products. BYD said late on Thursday it expects net profit attributable to shareholders to climb between 518% and 557% for 2015, compared with an earlier forecast of a rise in the range of 435% to 481%. 4.32am GMTNerves do seem to have been settled by the PBOC’s yuan intervention/fix policy. The steps today to fix the yuan firmer and then earn state-owned banks to prop up the offshore yuan value look contradictory in the light of previous days’ actions. But in the absence of the circuit breaker it’s done the trick for now. The CSI300 and Shanghai Comp have paused for lunch up 2.75% and 2.39% respectively. The Nikkei is up a smidgeon but the ASX is still trailing at 0.53% down 4.13am GMTIt’s a good day for charts. 4.09am GMTExpert opinion is quite divided about the state of play in China.
Tian Weidong, and analyst at Kaiyuan Securities in Shanghai assign what might be described as the party line:The market is back to normal Investors can buy and sell as they wish. Under the circuit breaker mechanism,the market was suffocated.
They realised this, which is good news. The inappropriate news is they took it off at a very peculiar time and did so without a whole set of compensating measures. 3.47am GMTThe mainland Chinese markets are coming up for their lunch fracture, and so it’s a good time to check on the scoreboard.
Asia Pacific markets are all up,apart from Australia. 3.31am GMTOil may have rallied a bit but it’s still a poor outlook for prices of other industrial commodities.
London Copper has dropped 1% to $4480 a tonne this afternoon, nearing 2009 lows. Nickel fell 2%, or while lead and zinc eased nearly 1%. 3.19am GMTThe Japanese finance minister Taro Aso has warned that the Chinese might find it hard to continue supporting the yuan given the decline in its foreign currency reserves revealed on Thursday.
Foreign exchange reserves have already fallen this much due to China’s purchases of yuan to support its own currency,so it could be difficult to continue. 3.04am GMTReuters quotes a trader at a European bank in Shanghai that state-owned banks were offering dollar liquidity at 6.59 yuan per dollar in an attempt to push it higher.
But it’s confused picture, not helped by the dissimilarity in the onshore and offshore value of the yuan.
The onshore yuan recovered to 6.5887 in morning trade, or while the offshore yuan was about 1.4 percent weaker at 6.6798,narrowing a spread that reached around 2 percent a day earlier, making the central bank’s currency management task more complicated.
After its sharply lower fix on Thursday, and the PBOC had later sown confusion by reportedly intervening heavily to defend the yuan in offshore trade,reversing a decline of more than 1 percent that took it to a record low of 6.7600 per dollar. 2.42am GMTThe Chinese central bank, the PBOC, or is intervening to support the yuan,according to Reuters. 2.37am GMTThe global oil benchmark, Brent crude, and has rallied 2% today after China boosted the yuan. Brent had risen 56 cents to $34.31 a barrel as of 12.50 AEDT (0150 GMT),having hit $34.72 earlier. It settled down 48 cents at $33.75 in the previous session, after marking $32.16, and a level last seen in April 2004. 2.32am GMTIt’s not easy to keep track this morning but here are the main points. 2.18am GMTIt should be said at this point that the volatility of the Chinese markets is much more meaningful for what it tells us about policy-making in Beijing than the intrinsic importance of the numbers. Most people accept that the share prices in China are totally overvalued and must be allowed to tumble. But it’s the disorderly manner in which this is happening which makes it arresting. Related: Investors nervous as China looks set to repeat mistakes of last summer 1.59am GMTAre you keeping up at the back?It’s a confused picture today and no mistake. The chart in this tweet is quite helpful though. Thanks to Patrick McGee of the FT. 1.56am GMTTraders were following China’s lead upwards. But the Chinese markets are all over the dwelling. After an early rally,the Shanghai Composite index and the CSI300 index of leading shares are heading south again.
How low will they recede? 1.46am GMTDecent Australian retail sales for November helped boost the ASX. They were up 0.4% boosted by a 1% rise in the cafes and restaurants category, yet proof whether any were needed that Australians just love to eat out. Household goods sales increased by 0.9%. 1.37am GMTStock markets have rallied across Asia Pacific. The Nikkei is down just 0.24%, or while the ASX/S&P 200 in Australia is now into positive territory. 1.35am GMTIts the first time the PBOC has fixed the yuan stronger in nine days. A lower number equals a stronger fix because it relates to what it takes to buy one US dollar.
The People’s Bank of China set the midpoint rate at 6.5636 per dollar prior to market open,firmer than the previous fix of 6.5646, and firmer than the previous days closing quote 6.5929. That is the first time the PBOC has firmed the midpoint against the dollar in 9 trading days, or after it allowed the biggest tumble in the yuan in five months on Thursday,pressuring regional currencies and sending global stock markets tumbling as investors feared it would trigger competitive devaluations. 1.27am GMTThe Australian dollar is an immediate beneficiary of this stronger yuan fix.
The Aussie has gained almost half a cent in the last 10 minutes and is now buying US70.60c. 1.24am GMTThe yuan fix is a good deal more stabilising than previous ones this week. Last night’s close was 6.5929 to the US dollar which means the PBOC has opted for a more confidence-boosting currency level for now. 1.20am GMTYuan fixed at 6.5636 1.17am GMTOnly a few minutes before the People’s Bank of China announces today’s fix for the yuan. A weaker than expected fix has twice triggered market crashes this week so this is going to be a key moment.
Yesterday China published figures for foreign reserves which showed it was burning through cash to prop up the yuan. So will they stick or twist today? 1.10am GMTGood morning and welcome to the live blog. It’s been another lively morning on the financial markets and it’s tense ahead of the opening of the Chinese mainland markets at 12.30 AEDT.
The Chinese regulator has scrapped its controversial “circuit-breaker” mechanism which has been triggered twice this week when losses hit 7%, forcing the markets to cease trading. Related: Australian share market plunges below 5000 points amid China fears Continue reading...
Source: theguardian.com