The Hang Seng China Enterprises Index of mainland shares in Hong Kong tumbled 14 per cent in July, its worst loss since September 2011.
China’s two stock exchanges have slapped trading limits on more than 20 accounts as the market regulator on Friday announced a crackdown on computerized “program trading“, which it blamed for recent volatility.
Shanghai is down 28% since its peak in mid-June, despite fresh rhetoric from the securities regulator that it wouldn’t pull away from buying shares. The smaller Shenzhen Component Index fell 0.18 percent to close at 12,374.25 points. While that’s spooked some investors, others have seen an opportunity to chase short-lived surges while the government appears to be buying in.
Massive intraday swings of up to 10 per cent and fears of further falls are deterring some traders as many wait to see if Beijing can put a floor under the market.
Investors are looking ahead to China’s official manufacturing data, which is expected to be released at the weekend.
Economist Paul Krugman used his column Friday to outline how “those who preside over economic booms often develop delusions of competence”, a category which includes both individuals like former Florida Governor Jeb Bush and the current Chinese leadership, which is attempting to shore up its economy in a manner that proves “the nation’s rulers have no idea what they’re doing”.
Fingering short sellers is a “smoke screen to lay the blame at someone else’s feet”, said veteran market analyst Peter Churchouse, adding such ad hoc measures are one reason foreign institutional investors have largely “headed to the hills”. “There is very little that the emerging-market countries can do to avert a further sharp selloff in their currencies”.
Commodities, battered by a stronger US dollar and worries about China’s slowdown, continued to slide. This has many people questioning what China’s stock market problems mean for its economy and the world.
After it hit a 13-year high of 125.86 yen days earlier, the dollar plunged from the mid-124 yen when the BOJ chief said that the yen was unlikely to weaken further. Investors are also looking over a report that showed the U.S. economy rebounded in the second quarter.
Gold has sank to five-year lows, and is now trading down 0.4% at $1083.70 a troy ounce in Asia.
China’s stocks fell, capping the benchmark index’s biggest monthly drop since August 2009, as the government struggles to rekindle investor interest amid a $US3.5 trillion rout.
In energy markets, benchmark U.S. crude was down 26 cents at $47.88 a barrel in electronic trading on the New York Mercantile Exchange.
Stocks elsewhere in the region were mixed, with the Nikkei Stock Average flat, as disappointing consumer-spending data offset a better-than-expected inflation reading. South Korea’s Kospi finished up 0.6 per cent at 2,030.16.
A recent report on CNBC noted that this sudden reversal-of-fortune for the Chinese stock market might have profound implications for U.S. companies that generate significant revenue from China and its Asian neighbors.
NEW YORK (AP) – After starting the day broadly lower, U.S. stocks recovered almost all of their losses by mid-afternoon Thursday and were trading near breakeven.
