Asia Pacific share market plummeted on Wednesday, 08 July 2015, as jitters over Chinese market volatility, combined with concerns over Greece's debt heightened risk-off sentiment.
A slew of official measures to provide support to Chinese stock markets have failed to halt a recent sell-off. The Shanghai benchmark is down more than 30% since peaking June 12 after a sizzling yearlong rally, on concern leveraged traders are liquidating bets after valuations exceeded levels seen during China's stock-market bubble of 2007.
China has put an arsenal of measures to work in recent days to stem the selloff that has wiped out roughly $2.4 trillion in value from China's equities. The China Securities Regulatory Commission today, 8 July 20015, announced that the China Securities Finance Corp., a commission unit that provides financing for margin trading, will increase purchases of small-cap stocks. The move follows an earlier pledge by the company to buy blue-chip shares to stabilize the market. China's central bank also said it would help ensure the China Securities Finance Corp. has ample liquidity to stabilize the market. The state-backed company may tap the interbank market, issue bonds, use mortgage financing and borrow from relending facilities, the People's Bank of China said in a statement. Over the weekend, Beijing suspended initial public offerings and made it easier for investors to borrow to buy stocks.
There was no breakthrough on Greece debt after an emergency summit of eurozone leaders held yesterday, 7 July 2015. Greece requested a three-year loan from the European Stability Mechanism on Wednesday. The region's leaders said the country's government must accept a rescue package by Sunday or face expulsion from the euro. European Union has now given Greece a deadline of Sunday, 12 July 2015, to produce a credible reform proposal and reach an agreement with lenders or risk sliding into bankruptcy and a eurozone exit.
Sunday now looms as the climax of a five-year battle to contain Greece's debts or see the country exit the currency union, potentially splintering a currency that was meant to be irreversible and throwing more than a half-century of economic and political integration into reverse.
Among Asian bourses
Australia stocks tumble
The Australian share market ended steep lower, reversing its entire yesterday's gains, as another dive in Mainland China market, the Greek debt crisis and slump in commodity prices overwhelm risk sentiments. All ASX sectoral indices declined, with shares of materials & resources, energy, industrial, and financial companies being top losers. The benchmark S&P/ASX 200 Index stumbled 111.90 points, or 2%, to 5469.50 points, while the broader All Ordinaries Index dropped 107.50 points, or 1.93%, 5456.50 points.
Mining and energy stocks tumbled the most in Sydney market after commodity prices tanked overnight on the back of worries over a deteriorating outlook in China. The spot price for iron ore fell 4.4% Tuesday to US$49.70 a metric ton and copper prices plunged to a six-year low. China is the world's top consumer of both. U.S. oil prices also fell Tuesday to a near-three-month low on the turmoil in Chinese markets and on concerns about a growing glut of crude oil. Among miners, Shares of BHP Billiton tanked 3.1% to A$25.43, Rio Tinto 3.3% to A$50.06, and Fortescue Metals Group 6.2% to A$1.675. Among energy stocks, Woodside Petroleum slipped 2.9% to A$33.62, Oil Search 2.4% to A$6.83 and Origin Energy 1.9% to A$11.13.
Likewise, a sharp drop for Comex gold prices dragged Evolution Mining 2% down at A$1.21, while Newcrest Mining lost 3.8% to A$12.59 and Perseus Mining shed 4.8% to A$0.40.
Stock in explosives-and-fertilizer maker Incitec Pivot dropped 2.6% to A$3.71 after it said its Moranbah ammonium-nitrate plant had suffered a drop in its gas supply.
Health insurer NIB Holdings shed 3.2% to A$3.36 after news it was buying travel-insurance company World Nomads Group Ltd. for just over A$70 million.
Nikkei smashes 3.1%
Japanese share market stumbled, as worries over China's relentless sell-off and Greece's debt crisis weighed on investor sentiment. The Nikkei Stock Average tanked 638.95 points, or 3.14%, to end at 19737.64 points, its worst decline in percentage terms since March 14, 2014. It remained up 13.1% for 2015 so far. The Topix index of all Tokyo Stock Exchange First Section issues lost 3.34%, or 54.75 points, to close at 1582.48 points.
Export-related stocks burnt the most in Tokyo market slide amid stronger yen, with strong China linked companies leading losses on concerns about China's economy. Komatsu fell 5.8% and Hitachi Construction Machinery closed down 4%, while China-exposed robot maker Fanuc Corp lost 4.5%. Trading giant Itochu Corp, which has a large investment in Citic, owner of China's biggest brokerage and one of the country's biggest banking groups, slumped 9.2%. Nissan Motor closed down 6.6% to following the company's announcement of an abnormal deployment of an airbag made by Takata.
Shares of convenience -store operators were also down despite reasonably strong quarterly earnings. Seven & I Holdings Co fell 1.9% despite a 7% gain for March-May net profit, while rival Lawson Inc lost 4% despite a 16% rise in its pretax profit. Similarly, FamilyMart Co tanked 3.3% after reporting a 20% gain in quarterly pretax profit.
Noritz shares dropped 10% after housing equipment and fixture maker slashed its full-year operating profit guidance by 25% to Y6 billion as sales declined in Japan more than expected after the April 2014 consumption tax hike.
Japan logged its eleventh straight monthly current account surplus in May, with the surplus widening to 1.88 trillion yen ($15.36 billion), according to the finance ministry data released on Wednesday.
China stocks extend rout despite government boost
Mainland China's stock market has suffered another day of heavy losses, defying renewed efforts from Chinese government agencies to shore up plunging share markets. Investors were also spooked by news that more companies have issued requests a trading halt. The vast majority of stocks listed on the benchmark index shed 10%, the maximum limit shares are allowed to fall before being halted. The benchmark Shanghai Composite Index was down as much as 8% in early trade, eventually closing 5.9% lower at 3507.19 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, lost 2.50%, or 48.38 points, to 1884.45. China's stock market ended lower for fifth time in past six trading sessions. The Shanghai Composite has lost more than 32% down from its June 12 peak of 5166.35. The Shenzhen market was down 41% over the same period.
China's financial regulators unveiled another wave of supportive measures before the stock market open Wednesday but again failed to stop the slide in stock prices. Foreign investors extended a record three-day exodus as some said government meddling is making matters worse.
The China Insurance Regulatory Commission announced shortly before the open that it would lift the cap on how much money insurance companies can invest into blue chip stocks, allowing them to put as much as 40% of total asset into blue chips from the previous limit of 30%. At the same time, the China Financial Futures Exchange announced it would raise the margin requirement for short positions in CSI 500 Index Futures. The Exchange said the margin requirement for all contracts is being raised to 20% on Wednesday from the previous 10% and will be further raised to 30% from Thursday on. The move will increase costs for opening short positions.
Shortly after the market open, the People's Bank of China said on its website that it will closely watch stock market movements and guard the bottom line of ensuring there are no systematic and regional risks as a result of market selling. The Chinese central bank said it will ensure the China Securities Finance Corp has sufficient liquidity with various tools.
More than 40% of the value of companies on the mainland halted trading on Wednesday in an effort to stop the slide. Total of 660 companies asked for their shares to be suspended on Wednesday, taking the total number of companies suspended to 1429 out of the 2776 stocks listed on the main Shanghai and Shenzhen exchanges.
All 10 sectors in the SSE index slid, with shares of financial and energy players were hardest hit. Industrial & Commercial Bank of China, the biggest lender, fell 4.7%. China Construction Bank Corp. dropped 8.4%. Citic Securities and Everbright sank by the daily limit of 10% each. PetroChina Co., the largest energy producer, slumped 9.1%.
Hong Kong stocks extend losses amid China sell-off
The Hong Kong stock market plummeted for fourth straight session, as jitters over Chinese market volatility, combined with concerns over Greece's debt triggered risk-off selloff. The Hang Seng Index stumbled 1458.75 points or 5.84% to finish at 23516.56 points, off an intra-day low of 22836.82. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, dropped 720 points, or 6.1%, to 11107.30 points. Turnover increased to HK$235.97 billion from HK$172.5 billion on Tuesday.
Market heavyweights were top selling targets in a market crash. HKEx (00388) dived 8.4% to HK$203.4. Tencent (00700) sank 6.8% to HK$134.8. HSBC (00005) fell 3.9% to HK$65.75. China Mobile (00941) slipped 6% to HK$89.95.
Shares of Chinese financials and developers saw heavy selling pressure. BOC (03988) plunged 6.9% to HK$4.34. CCB (00939) retreated 6% to HK$6.39. COLI (00688) slid 10% to HK$22.5. CR Land (01109) dived 8.4% to HK$19.28.
Brokers were also plunged. HTSC (06886) plummeted 12.8% to HK$14.18. GF Sec (01776) dipped 5.2% to HK$13.56. CITIC Sec (06030) declined 9.5% to HK$19.1 despite its net profit for June amounted to RMB2.4 billion.
Sensex, Nifty hit lowest closing level in more than a week
Indian stock market closed steep lower on following a major sell-off in other Asian markets. The Sensex lost 483.97 points or 1.72% to settle at 27,687.72. The steep slide for key equity benchmark indices in India was triggered by a sharp setback in Chinese stock market. Continued concerns about Greece's debt crisis also weighed on sentiment in global markets.
Among sectoral indices on BSE, the S&P BSE Realty index (down 1.78%), the S&P BSE Auto index (down 2.24%) and the S&P BSE Metal index (down 3.89%), underperformed the Sensex. The S&P BSE Capital Goods index (down 0.49%), the S&P BSE Consumer Durables index (down 0.69%), the S&P BSE Healthcare index (down 0.72%), the S&P BSE Power index (down 0.72%), the S&P BSE FMCG index (down 0.97%), the S&P BSE Teck index (down 1.22%), the S&P BSE IT index (down 1.47%), the S&P BSE Oil & Gas index (down 1.48%) and the S&P BSE Bankex (down 1.69%) outperformed the Sensex.
Foreign portfolio investors (FPIs) bought Indian shares worth Rs 143.07 crore from the secondary equity market yesterday, 7 July 2015, as per data from Central Depository Services (India). Domestic institutional investors (DIIs) sold shares worth a net Rs 94.71 crore yesterday, 7 July 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 3% to 8976.11. South Korea's KOSPI dropped 1.2% to 2016.21. New Zealand's NZX50 sank 0.6% to 5767.70. Singapore's Straits Times index lost 1.7% at 3285. Indonesia's Jakarta Composite index fell 0.7% to 4871.57. Malaysia's KLCI dropped 1% to 1695.83.
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