Stocks Tumble Despite PBOC Injection
Fresh anxieties about China’s commitment to steadying the stock market sparked heavy losses in Shanghai Tuesday, despite signals of a housing recovery and the central bank’s latest steps to keep cash from fleeing.
In Japan, the Nikkei 225 index dumped 65.79 points, or 0.3%, to 20,554.47
In Hong Kong, the Hang Seng Index collapsed 339.68 points, or 1.4%, to 23,474.97, turning negative for the year, and a gauge of Chinese companies listed in the city fell 1.8%.
In Australia, central bank minutes show officials see a silver lining in the decline of its currency, which recently weakened further after China’s yuan devaluation. A cheaper currency could help make Australia’s commodity exports more competitive. The Australian dollar was last down 0.2% at $0.7350 U.S.
CHINA
In China, the CSI 300 plummeted 252.46 points, or 6.2%, to 3,825.41
Losses among stocks of state-owned enterprises in Shanghai started building earlier in the morning amid skepticism about Beijing’s commitment to reform. Reports of efforts to accelerate reform, long touted as a way to open up bulky conglomerates to private investment and market forces, had gained momentum in recent weeks and buoyed related stocks.
The heavy selling in the final minutes of trading echoed sessions in recent weeks, when faltering assurances of China’s role in the market hastened losses.
A total of 58% of stocks listed in Shanghai hit their downward daily limit of 10%, while 52% of all Shenzhen-listed shares met the same barrier, according to FactSet.
Meanwhile, neither measures to calm worries of capital flight given a weaker yuan nor positive economic data satiated investors.
Earlier Tuesday, China’s central bank injected the largest amount of cash into the financial system on a single-day basis in almost 19 months, signaling Beijing’s growing concerns about capital outflows after the yuan’s recent weakening.
In a routine money-market operation Tuesday, the People’s Bank of China offered 120 billion yuan ($18.77 billion U.S.) worth of seven-day reverse repurchase agreements, or reverse repos, which are a short-term loans to commercial lenders in the money market.
Investors also looked past better housing data, which has been a rare bright spot after a stock-market rout and period of currency volatility, though some say a sanguine reading could diminish hopes for stimulus.
On Tuesday, the average price of new homes in 70 Chinese cities rose for a third-straight month in July, up 0.15%, on a monthly basis. That compares with a rise of 0.16% in June.
Meanwhile, the yuan has stabilized after China devalued the currency by nearly 2% last week. On Tuesday, China’s central bank set the yuan’s trading midpoint nearly flat with the level a day earlier, at 6.3966 per U.S. dollar. The currency can trade within a 2% band above or below that. The yuan was last down 0.1% at 6.40 against the U.S. dollar
In other markets
In Korea, the Kospi index shed 12.26 points, or 0.6%, to 1,956.26
In Singapore, the Straits Times Index slumped 17.70 points, or 0.6%, to 3,049.65
In Taiwan, the Taiex index plunged 36.20 points, or 0.4%, to 8,177.22
The NZX 50 lost 16.65 points, or 0.3%, to 5,710.77
The ASX 200 Index slid 64.51 points, or 1.2%, to 5,303.15
