China share trading suspended as 7% dive leads global sell-off
AFP – 12 hours ago
Chinese markets were suspended on January 7 for the second day this week after they fell more than seven percent
Global shares dived Thursday, led by Chinese markets, which were suspended after a more than seven percent plunge as Beijing weakened the value of the yuan currency to a five year-low.
In a painful echo of the summer rout that wiped trillions of dollars off valuations, mainland investors sold up on fears about the world's number two economy, a key driver of global growth.
Asia picked up from another sell-off on Wall Street, where dealers were spooked by a World Bank report cutting its global growth forecasts again, citing weakness in emerging markets, particularly China.
Thursday's losses mark one of the worst starts to a trading year for decades as nerves are shredded by a perfect storm of weak global growth -- particularly in China -- a slump in oil prices to more than 11-year lows and geopolitical tensions.
Regulators in China called an end to trade within just 30 minutes of opening after the central bank weakened the value of its yuan currency by 0.51 percent against the dollar.
The drop was the biggest since August when the value was cut by five percent in a week -- sparking weeks of global market turmoil over worries Beijing did not have a handle on its economic crisis. The yuan is now at its weakest in five years.
"The Chinese yuan is smack bang at the heart of concerns. For risk assets to stabilise and sentiment to turn around, we are going to need a stable or even positive move in the Chinese currency," Chris Weston, chief market strategist in Melbourne at IG Ltd, told clients, according to Bloomberg News.
Trading was halted just before 10am (0200 GMT) as a "circuit breaker" kicked in after the benchmark Shanghai index slumped seven percent and the Shenzhen composite index, which tracks stocks on China's second exchange, tumbled 8.2 percent.
The stop -- activated when markets fall more than seven percent -- was also triggered on Monday, its first day of operation. It is based on the CSI 300 index, which tracks the largest 300 stocks on the two exchanges.
- Oil heads towards $32 -
Authorities unveiled the circuit breaker as part of efforts to reduce volatility on China's volatile exchanges following the summer sell-off.
"The use of the circuit breaker is the main reason for the falls as investors panicked after seeing it being triggered on Monday," Phillip Securities? analyst Chen Xingyu told AFP.
Mainland shares saw just mild losses Tuesday and a more than two percent gain Wednesday, on government injections of cash, which reports said were being used to buy key companies.
The concerns over China's economy -- which is growing at its slowest pace in a quarter century -- have been exacerbated by worries about the looming expiry Friday of a ban on selling by certain investors.
But on Thursday the restrictions, also brought in during the summer, were extended indefinitely with some tweaks, including a requirement to disclose planned sales 15 trading days in advance.
The carnage in China has seeped through to global markets and Asian trading floors continued to see red. By the end Hong Kong slumped more than three percent and Tokyo shed 2.2 percent.
Sydney -- where several firms with trade links to China are listed -- lost 2.2 percent and Seoul was 1.1 percent off. There were also substantial losses in Singapore, Taipei, Bangkok and Manila.
That followed more big losses across US and European bourses.
And in early trade Thursday Paris plunged 3.0 percent, Frankfurt shed 2.5 percent and London slumped 1.9 percent.
Energy firms were among the worst hit after Brent oil prices fell six percent to their lowest finish since July 2004. The US benchmark West Texas Intermediate sank 5.6 percent to hit its weakest close since December 2008.
On Thursday in Asia both contracts fell another five percent towards $32, with China's weakness also playing a key role.
The falls came after the US Department of Energy said stockpiles of gasoline and distillates, including diesel and heating fuel, had surged. The figures fed worries about a global supply glut and weak demand that has sent prices slumping more than 60 percent since mid-2014.
On currency markets, a rush to safe investments hit emerging currencies, while the dollar fell below 118.00 yen for the first time since August.
- Key figures around 0830 GMT -
Shanghai - composite: DOWN 7.0 percent at 3,125.00 (close)
Hong Kong - Hang Seng: DOWN 3.1 percent at 20,333.47 (close)
Tokyo - Nikkei 225: DOWN 2.3 percent at 17,767.34 (close)
London - FTSE 100: DOWN 1.9 percent at 5,958.88
Euro/dollar: UP at $1.0815 from $1.0782 late Wednesday
Dollar/yen: DOWN at 117.92 yen from 118.49 yen
New York - Dow: DOWN 1.5 percent at 16,906.51 (close)
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Chân thành cám ơn Quý Anh Chị ghé thăm "conbenho Nguyễn Hoài Trang Blog".
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