A shares re­act to US sell-off

Asian mar­kets plunge fol­low­ing Wall Street bloodbath

Global Times - - Front Page - By Xie Jun

Chi­nese main­land stock mar­kets took a nose­dive Thurs­day with nearly 1,000 stocks slump­ing by the trad­ing limit, trig­gered by an overnight rout on Wall Street.

Ex­perts said that main­land mar­kets will even­tu­ally turn bullish de­spite ex­ter­nal in­flu­ences, and in­vestors should take ad­van­tage of “in­vest­ment chances” dur­ing the slump.

Gao Feng, a spokesper­son of the Chi­nese Min­istry of Com­merce, said at a rou­tine press con­fer­ence on Thurs­day that China should “walk its own way and do its own job” re­gard­less of the changes in the ex­ter­nal en­vi­ron­ment and no mat­ter how those changes might af­fect China.

Gao’s com­ments come after the two main­land bourses ex­pe­ri­enced a sharp de­cline on Thurs­day. The Shang­hai Com­pos­ite In­dex plunged 5.22 per­cent, or 142 points, to 2,583 points on Thurs­day, while the Shen­zhen Com­po­nent In­dex dropped 6.07 per­cent, or 486 points, to 7,524 points.

A to­tal of 979 stocks plunged to their daily trad­ing limit of 10 per­cent, with liquor and high-tech stocks lead­ing the plunge.

The main­land stocks plunged fol­low­ing a bloodbath on US stock mar­kets overnight. The S&P 500 slumped 3.3 per­cent to end at 2,785.68 points, while the tech-rich NAS­DAQ Com­pos­ite In­dex plum­meted 4.08 per cent to fin­ish the ses­sion at 7,422.05 points on Wed­nes­day. NAS­DAQ con­tin­ued its down­ward trend in early trad­ing on Thurs­day, slip­ping 0.5 per­cent to reach 7,385 points as

of 9:45 pm Bei­jing time.

The US stock mar­ket’s plunge trig­gered a mas­sive slump around the globe. Aus­tralia’s ASX200 in­dex slipped by 2.74 per­cent to 5,884 points on Thurs­day, while Ja­pan’s Nikkei 225 de­creased by 3.89 per­cent to 22,590 points on Thurs­day, the big­gest sin­gle-day fall since March. The South Korea-based KOSPI slipped 4.44 per­cent to 2129 points on Thurs­day.

The Hong Kong’s Hang Seng In­dexes slumped 3.54 per­cent to 25,266 points on Thurs­day.

Li Dax­iao, chief econ­o­mist at Shen­zhen-based Yingda Se­cu­ri­ties, sug­gested the gov­ern­ment bol­ster re­ced­ing con­fi­dence in the mar­ket by rolling out mea­sures to “sta­bi­lize the mar­kets.”

“At this mo­ment, in­vestors should not panic, but deal with in­vest­ment more ra­tio­nally,” Li said.

US turn­ing point?

Chi­nese ex­perts pointed out that the A-share mar­ket’s slump is mostly a spillover from the dive in US and global shares, be­hind which the world’s wor­ries are that the Sino-US trade dis­pute could trig­ger a pos­si­ble eco­nomic col­lapse.

Cheng Shi, chief econ­o­mist of ICBC In­ter­na­tional, said that be­fore the US adds fur­ther weight to the cur­rent tar­iff in­creases it has launched against China, the time is nar­row­ing for China and the US to set­tle their dis­putes by me­di­a­tion, and this sense of ur­gency has caused pan­ick around the world.

“The mar­ket is hold­ing back their ex­pec­ta­tions for the re­cov­ery of the real econ­omy. Al­though the im­pact of trade pro­tec­tion­ism has not yet been felt, the ef­fects will catch up even­tu­ally,” Cheng said.

The In­ter­na­tional Mone­tary Fund (IMF) re­cently low­ered ex­pec­ta­tions for global eco­nomic growth in 2018 and 2019 by 0.2 ba­sis points com­pared with its ear­lier pro­jec­tions in July.

Xi Jun­yang, a fi­nance pro­fes­sor at the Shang­hai Univer­sity of Fi­nance and Eco­nom­ics, told the Global Times on Thurs­day that in­vestors both at home and abroad worry that the US stock dive might be a sign that the flour­ish­ing US econ­omy is in de­cline.

“The A-share mar­ket is al­ways driven by mar­ket moods, and it’s nor­mal that in a bear­ish cy­cle, it would over re­act when there are strong fluc­tu­a­tions in over­seas mar­kets,” Xi said.

Bullish mar­ket will re­turn

Ex­perts are still con­fi­dent that the A-share mar­ket will not be swept by the pes­simistic mood and will show a firm up­ward trend when the econ­omy im­proves.

“The bullish mar­ket might be late but it is sure to ar­rive sooner or later,” Xi said, adding that late-2019 is likely the point when the A-share mar­ket will be­gin an­other bull run.

“When the stock mar­ket drops but there are pos­i­tive eco­nomic signs, Ashare mar­kets will start to re­bound re­gard­less of ex­ter­nal in­flu­ence,” Xi said.

Photo: AFP

In­vestors watch stock prices fall on a screen at a se­cu­ri­ties com­pany in Bei­jing on Thurs­day. Asian mar­kets plunged fol­low­ing the worst ses­sion on Wall Street in months, after US Pres­i­dent Don­ald Trump said the Fed­eral Re­serve had “gone crazy” with plans for higher in­ter­est rates.

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