China Market tanks amid fears over global economy

The Mainland China equity market tumbled on Thursday, 25 October 2018, following the overnight sell off on Wall Street and selloff in other Asian bourses which fell amid nervousness around corporate earnings and geopolitical uncertainty added to heightened worries about global growth, Italy's free spending budget and Sino-US trade tensions. Fresh market-support measures by the Chinese government failed to ease investor worries about high leverage and the Sino-U.S. trade war. In afternoon trades, the benchmark Shanghai Composite Index dropped 1.4%, or 37.09 points, to 2,566.21, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 2%, or 25.78 points, to 1,271.44. The blue-chip CSI300 index sank 1.34%, or 42.68 points, to 3,145.52.

Investors largely ignored news overnight that government-backed Shenzhen Investment Holding would issue 1 billion yuan of bonds, raising money to support struggling listed firms.

China's central bank intervened for the fifth day running by injecting 100 billion yuan into open market operations. It brings the total for the past five days to 540 billion yuan. The move aimed to offset the impact of factors including tax payments and government bond issuance and keep liquidity in the banking system at a reasonable and ample level, according to a PBOC statement. China will continue to implement a prudent and neutral monetary policy and properly deal with the relationship between stabilizing growth, deleveraging and strengthening regulatory control.

ECONOMIC NEWS: China's power generation rose 7.4% in the first nine months, with electricity from nuclear and wind power facilities expanding rapidly in September, the National Development and Reform Commission said on Wednesday. Power consumption in the first nine months rose 8.9%, 2%age points more than the same period of last year, but slightly slower than the 9% for the first eight months. In September, electricity from hydropower plants rose 4.1%. Nuclear and wind power production surged 12.8% and 13.5% respectively.

CURRENCY NEWS: China's yuan was down against the U.S. dollar on Thursday, after soft mid-point fixing by central bank. Prior to market open, the People's Bank of China set the midpoint rate at 6.9409 per dollar, 52 basis points softer than the previous day's fix.

OFFSHORE MARKET: US stock market closed down Wednesday, as fear that the economy is exiting the "peak" earnings environment helped by US tax cuts that were enacted late last year. Investors also have been unnerved by comments from industrial companies saying trade conflicts have raised material costs. The Dow Jones Industrial Average lost 2.4% to close at 24,583.42. The tech-rich Nasdaq Composite Index plummeted 4.4% to finish at 7,108.40, while the broad-based S&P 500 sank 3.1% to 2,656.15.

European markets also ended down on Wednesday after widely watched Purchasing Managers Index (PMI) survey reports showed Euro zone business growth slowed more than expected this month. German private-sector growth fell to its lowest in more than three years, and manufacturing in France hit a 25-month low, according to other surveys. The European Central Bank (ECB) holds its monetary policy meeting later today, and investors will be looking for any new guidance from the ECB acknowledging the recent slowdown in growth as well as the political stand-off between Brussels and Rome over Italy's free spending budget. The U.K.'s FTSE 100 Index inched up by 0.1%, the French CAC 40 Index dipped by 0.3%, and the German DAX Index slid by 0.7%.

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