China’s stocks dropped, briefly dragging the benchmark index into a so-called bear market and triggering declines in equities and commodities worldwide. The yen and Treasuries rose as investors sought less risky assets.
Shanghai’s 300 Composite Index plummeted 157.42 points, or 5%, to 3,014.57. Copper fell 2.5%. The yen strengthened against all 16 of the most-traded currencies tracked by Bloomberg and the pound weakened. The 10-year Treasury yield dropped to its lowest level since July 14.
The U.S. and Chinese governments pledged more than $13 trillion U.S. to combat the worst financial crisis since the Great Depression, helping to fuel a nine-month rally in the Shanghai Composite that pushed the index’s price-to-earnings ratio to almost double the valuations for the S&P 500, according to data compiled by Bloomberg. Earnings for Chinese companies that reported since July 8 have trailed analysts’ estimates by 12%on average, Bloomberg data show.
The 300 was weighed down by Maanshan Iron & Steel Co., which tumbled 7.5%. The company posted a half-year loss for the second consecutive period as the global recession curbed demand from homebuilders and automakers.
Stocks have slumped as new loans in July declined to less than a quarter of June’s level and companies including Yunnan Copper Industry Co. reported losses. The gauge is still 53% higher for the full year.
China Everbright Securities Co., which started trading yesterday and posted the smallest first-day gain of any new stock in Shanghai this year, slumped 10%. China Cosco Holdings slumped 7.4%.
The Nikkei 225 index in Tokyo lost 80.96 points, or 0.8%, to close at 10,204.00.
Tokio Marine Holdings Inc. dropped 2% after Japanese regulators said new guidelines will hurt insurers’ solvency ratios. Sony Corp. sank 3.9% after cutting the price of its PlayStation 3 game console. The company cut the price of its PlayStation 3 console by 25%, bowing to demands from game publishers and increasing the pressure on industry leader Nintendo Co. to follow.
Nintendo lost 0.5%.
Among stocks that rose today, Honda Motor Co. added 2% after Nomura Holdings Inc. upgraded Japan’s auto industry. Nissan Motor Co., Japan’s number-three automaker, added 0.7%. Qantas Airways Ltd., Australia’s biggest airline, advanced 3.5% as it signaled improving passenger volumes.
STX Pan Ocean Co. Ltd., South Korea’s biggest bulk carrier, dipped 4.5% in Seoul. Mitsui O.S.K. Lines Ltd., the world’s largest operator of iron-ore vessels, slipped 2.2% in Tokyo.
In Hong Kong, the Hang Seng index slid 352.04 points, or 1.7%, to 19,954.23.
Woodside Petroleum Ltd., Australia’s second biggest oil and gas producer, gained 3.7%. The company said first-half profit fell 12% from a year earlier on lower oil prices.
Elsewhere:
Singapore’s Straits Times Index fell back 44.94 points, or 1.8%, to 2,522.78
South Korea’s Kospi index subsided 4.28 points, or 0.3%, to 1,540.96
Taiwan’s Taiex lost 1.19 points, to 6,788.58
New Zealand’s NZX 50 Index bucked the trend and actually gained 9.46 points, or 0.3%, to 3,081.05
Australia’s S&P/ASX 200 gave back 7.80 points, or 0.2%, to 4,373.80
