Fears about the deepening effects of a slowdown in China's economy rattled investors. The sharp setback in Chinese stocks materialized as China's central bank failed to take expected action over the weekend to provide more support for the financial system. China's surprise move to devalue its yuan two weeks ago which could make its exports more competitive and a string of weak data signal the economy may be feebler than expected, despite a campaign to rev up growth including interest rate cuts and measures to boost lending.
Chinese stocks have tumbled since peaking in mid-June and authorities have launched broad interventions to try to restrain the drops, but concerns over stalling growth and doubts about valuations continue to drag.
The surprise devaluation of the yuan on August 11 added to fears the world's second-largest economy is weaker than thought, sparking a sell-off that has wiped more than US$5 trillion off world equity markets. China's economy, a key driver of global growth, expanded at its weakest pace since 1990 last year and has slowed further this year, growing 7.0% in each of the first two quarters. The yuan devaluation was widely seen as intended to give Chinese exporters -- a key sector of the economy -- a boost by making their products cheaper abroad. Concerns growth is decelerating in the world's number two economy were fuelled on Friday when the preliminary figure for Caixin's purchasing managers' index for August, a key indicator of manufacturing activity, slumped to a 77-month low.
Fears that the once-vibrant Chinese economy may be slowing down are also clouding the timing of a U.S. Federal Reserve decision to raise short-term rates. The Fed policy-meeting minutes released this month showed that central-bank officials still haven't settled on whether to raise rates in September.
Among Asian bourses
Australia market tumbles 4.1%
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The Australian share market plummeted, wiping out more than A$60 billion of wealth, as risk aversion selloff spurred by deepening fears over the slowdown in the world's second-largest economy and a possible exit from the eurozone by Greece. All ASX sectors closed lower, with energy and materials were the hardest hit. Meanwhile, selloff pressure was evident in financials, realty, property trusts, industrials and retailers. The benchmark S&P/ASX 200 Index stumbled 213.30 points, or 4.1%, to 5001.30 points, while the broader All Ordinaries Index tanked 210.60 points, or 4.03%, to 5014.20 points.
Shares of material and energy sectors suffered heavy damages today on tracking steep pullback in commodity metal and crude oil prices. U.S. crude was down 3% at $39.20 a barrel while Brent lost 2.4% to $44.40 a barrel. Copper, seen as a barometer of global industrial demand, tumbled 2.5%, with three-month copper on the London Metal Exchange hitting a six-year low of $4,920 a tonne. Nickel slid 4.6% to its lowest since 2009 at $9,730 a tonne. Oil and gas producer Woodside Petroleum dropped 4.9% to A$30, Oil Search 5.7% to A$5.81, Santos 11.3% to A$4.97, and Origin Energy 5.8% to A$7.98. BHP Billiton fell 5% to A$22.89 and Rio Tinto lost 5.2% to A$46.97. Iron ore miner Fortescue lost 14.6% to A$1.635 after the iron ore miner suffered an 88% slide in its full year profit. However steelmaker Bluescope Steel lifted 8.6% to A$3.67 after it announced an annual profit of A$136.3 million, up from a loss of A$82.4 million a year ago.
Nikkei tanks 4.6%, Topix slides 5.9%
Japanese share market finished the session steep lower as widespread fears of a China-led global economic slowdown and currency war triggered risk aversion selloff. All of the gauge's 33 industry groups declined, with shares of banks, real estate, financials, transportation & logistics, steel & nonferrous metals and automobiles & transportation equipment players being key losers. The Nikkei Stock Average tumbled 895.15 points, or 4.61%, to end at 18540.68 points. The broader Topix index ended 92.14 points, or 5.86%, lower at 1480.871 points.
Shares of banks, real estate, and financials were the biggest drags on the Topix industry groups. Mitsubishi UFJ Financial Group Inc. sank 8.3% and Sumitomo Mitsui Financial Group Inc dropped 8.1%. Real-estate developer Mitsui Fudosan Co. fell 8.3%.
Exporters dropped as the yen strengthened 0.9% against the dollar after surging 1.9% last week as investors liquidate their positions for riskier currencies and other assets. A higher yen is typically negative for Japanese exporter stocks. Honda Motor Co. fell 6.5%, while TDK Corp. lost 5.6%. Toyota Motor Corp. tanked 6.8% after extending a shutdown at its biggest source of production in China.
Energy shares slid after crude U.S. oil futures fell to $39 per barrel. Energy explorer Inpex Corp. dropped 4.2% while Japan Petroleum Exploration Co. sank 5.4%.
China market crashes 8.5%
Mainland China's stock market tumbled to, as risk aversion selloff intensified on deepening fears over the slowdown in the world's second-largest economy. Many companies, including some large state-owned firms, fell by the maximum daily limit of 10%. The benchmark Shanghai Composite index fell 8.49% to 3,209.91, taking its losses from the multiyear peak of 5,178.2 hit on June 12 to 38%. The Shenzhen Composite Index, which tracks stocks on China's second exchange, de-grew 7.7%, or 156.93 points, to 1882.46 points. Total volume of A shares traded in Shanghai was 36 billion shares, while Shenzhen volume was 19.38 billion shares.
Risk aversion selloff triggered on mounting concerns that growth is decelerating in the world's number two economy after a key gauge of China's manufacturing activity tumbled to its lowest level in 77 months. This week, investors will get a closer look at Chinese imports, vital for many countries that rely on China as a trade partner.
The losses come despite news over the weekend that China's giant pension fund will now be allowed to invest as much as 1 trillion yuan in domestic stocks the latest in a long line of attempts from the government to address the slide in Chinese markets. The State Council, or cabinet, on Sunday announced it will allow pension funds to invest as much as 30% of their total net assets in stocks. Pension funds had net assets of 3.5 trillion yuan ($547 billion) by the end of 2014. The move is the latest attempt by the government to support the equity market, after arming a state agency with more than $400 billion, banning selling by major shareholders and telling state-owned companies to buy stocks.
Heavyweight securities firms were among the biggest losers. China Merchant Securities plunged by its 10% daily limit to 16.04 yuan while Citic Securities also fell 10% to 16.38 yuan. China's two oil giants also lost ground. PetroChina lost 4.90% to 9.51 yuan while Sinopec dived 8.94% to 4.99 yuan.
Hong Kong market tanks 5.17%
Hong Kong stock market tanked for seventh straight session, as a fresh crash in Chinese stocks and selloffs in various markets overseas drives heavy falls in the city bourses. The Hang Seng Index ended down 1158.05 points, or 5.17%, at 21251.57 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, lost 592.76 points, or 5.81%, to 9602.29 points. Turnover increased to HK$139 billion from HK$118.3 billion on Friday.
Among the HK blue chips, 20 of them hit fresh 52-week lows. But CITIC (00267) was the only one that rose. It ended up 0.3% to HK$13.96. HKEx (00388) plunged 7% to HK$178.3. Other brokers also became targets of selling. Haitong Int'l (00665) dived 12% to HK$3.28. First Shanghai (00227) tumbled 11% to HK$1.11. Chinese insurers were dragged down by mainland market. China Life (02628) dipped 5% to HK$24.3. Ping An (02318) sank 8% to HK$35.5. PICC Group (01339) collapsed 8% to HK$3.51.
Indian stocks crash in global market selloff
A sell off in oil, banking and metal shares led the carnage on the domestic bourses. The barometer index, the S&P BSE Sensex, lost 1,624.51 points or 5.94% to settle at 25,741.56. The 50-unit CNX Nifty lost 490.95 points or 5.92% to settle at 7,809. The Sensex hit its lowest closing level in more than a year. The Nifty hit its lowest closing level in more than 10 months. The Nifty ended below the psychological 8,000 mark while the Sensex ended below the psychological 26,000 level. The sharp setback on the Indian bourses was triggered by a rout in Asian stocks.
The broad market depicted weakness. There were more than eight losers against every gainer on BSE. The BSE Mid-Cap index shed 7.68%. The BSE Small-Cap index dropped 8.81%. The decline in both these indices was higher than the Sensex's decline in percentage terms.
Metal and mining stocks dropped on concerns about slowdown in China's economic growth. Banks stocks declined. Index heavyweight ITC fell on reports that the Uttar Pradesh Food and Drug Authority will soon file a case against the company after it found lead far in excess than permissible limit in its Yippee Noodles. Shares of upstream oil exploration and production (E&P) firms dropped along with crude oil prices.
Meanwhile, Finance Minister Arun Jaitley expects Indian financial markets to stabilize soon, according to news reports. Jaitley has attributed the current turmoil in Indian financial markets to external factors, according to reports. Meanwhile, Reserve Bank of India Governor Raghuram Rajan said at a banking conference in Mumbai today, 24 August 2015, that it is not the role of the central bank of a country to elevate sentiments unduly to deliver booster shots to the stock market.
There was heavy selling of Indian stocks by foreign portfolio investors (FPIs) during the previous trading session on Friday, 21 August 2015. FPIs sold shares worth net Rs 2292.98 crore into secondary equity market on Friday, 21 August 2015, as per data from Central Depository Services (India). Domestic institutional investors (DIIs) bought shares worth a net Rs 1524.10 crore on Friday, 21 August 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 4.8% to 7410.34. South Korea's KOPSI declined 2.5% to 1829.81. New Zealand's NZX50 fell 2.5% to 5607.31. Singapore's Straits Times index shed 4.3% at 2843.39. Indonesia's Jakarta Composite index sank 4% to 4163.73. Malaysia's KLCI fell 2.7% to 1532.14.
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