China’s shares suffered their worst month in nearly six years this July, after confidence in a government-led recovery wavered earlier this week, knocking shares lower.
In Japan, the Nikkei 225 index gained 62.41 points, or 0.3%, to 20,585.24,
In Hong Kong, the Hang Seng Index restored 138.3 points, or 0.6%, to 24,636.28,
Fears that China’s selloff could spiral beyond the domestic equities market has unsettled the rest of the Asia region in recent weeks.
Investors have withdrawn $12.1 billion U.S. from emerging-market Asian equity funds in the last three weeks ending July 29, the largest three-week outflow in more than a decade, according to ANZ Research and EPFR Global, a fund data provider.
The withdrawals also come as investors prepare for the Federal Reserve to raise interest rates in the U.S. later this year.
Some $1.8 billion U.S. of that outflow has come from China, which has suffered its deepest market selloff since the global financial crisis.
Signs of a deepening slowdown in China also have pushed currencies in Asia to multiyear lows this month. Currencies are down, on average, 2% for the month against the U.S. dollar, while the Australian dollar has fallen over 5% over that period and New Zealand’s dollar is down 2.8%.
Declines in currencies, in part driven by sluggish global demand and a broadly stronger U.S. dollar, have failed to give a boost to exports. Last week, China signaled it would allow its currency to move more freely, by widening the yuan’s trading ban, another factor pressuring the region’s economies as Chinese goods could become more competitive.
Commodities are another casualty of a stronger U.S. dollar and expectations of a rate increase. Many materials are priced in the currency, making them more expensive for foreign buyers as the dollar strengthens. Higher interest rates in the U.S. also give investors incentive to shift to other assets, as commodities don’t provide any income and cost money to hold.
Gold has sunk to five-year lows, and is currently trading down 0.6% at $1,082 U.S. a troy ounce in Asia.
Concerns about oversupply and weak demand in China, one of the world’s biggest commodities consumers, have weighed on oil prices in recent months, too. Brent crude the global oil benchmark, was down 49 cents to $52.82 U.S. in Asian trade, ahead of a U.S. government supply report on Friday in the U.S.
In corporate news, shares of Noble Group Ltd. slipped for a second-straight day — falling as much as 22% from Wednesday’s close — as short sellers pile in on the commodities trader, which earlier this year faced criticism of its accounting practices. The company has denied any wrongdoing. Shares were down about 14.4% Friday.
CHINA
In China, the CSI edged up 1.29 points to 3,816.70
Shaken conviction in Beijing’s support drove wild intraday swings this week. This week’s rout followed an earlier wave of heavy selling, which at one point wiped out nearly a third of the value from Chinese equities. Authorities’ near-constant market intervention supported a rebound of as much as 18% from a trough on July 8.
But now the benchmark is down again, off 29% from its mid-June peak. For the month, it is off 14%, its worst monthly performance since August 2009.
On Friday, China’s securities regulator announced it had launched a probe into automated trading and restricted 24 stock accounts suspected of "influencing securities trading prices," according to its official website. The investigation seeks to root out possible causes of the recent volatility that has rattled China’s stock market.
China shares have been reeling since an 8.5% loss on Monday, the biggest daily decline in more than eight years, when investors dashed for the exits on worries that government-backed funds might wind down market support.
In other markets
Singapore’s Straits Times Index dumped 47.02 points, or 1.5%, to 3,202.50
In Taiwan, the Taiex index added 13.85 points, or 0.2%, to 8,665.84
In Korea, the Kospi index regained 11.13 points, or 0.6%, to 2,030.16
The NZX 50 added 29.11 points, or 0.5%, to 5,920.96
The ASX 200 Index gained 29.64 points, or 0.5%, to 5,699.16
