Black Fri­day for China stocks but met­als not so heavy

Kuwait Times - - BUSINESS -

LON­DON: Chi­nese shares slumped 5 per­cent yes­ter­day, hit by reg­u­la­tory and in­dus­trial sec­tor wor­ries, though it wasn’t enough to de­rail the first weekly rise for met­als like cop­per and zinc since early Oc­to­ber.

The Shang­hai Com­pos­ite in­dex and the CSI300 both saw their big­gest one-day drops in more than three months and en­sured it was set to be a sub­dued post-Thanks­giv­ing ses­sion for Wall Street.

Europe had a flat feel too. Bri­tain’s FTSE 100 was down 0.2 per­cent by 1230 GMT though 0.2 per­cent gains for France’s CAC40 and Ger­many’s DAX left the pan-re­gional FTSEurofirst 300 head­ing for a to­ken weekly gains. “There is clearly a risk that China will try and de­value the cur­rency fur­ther,” said Ankit Ghee­dia, eq­uity and de­riv­a­tive strate­gist at BNP Paribas.

“(How­ever) Europe is still trad­ing on the ECB next week, which is why the mar­ket is rel­a­tively re­silient,” he said re­fer­ring to expectations of an­other round of stim­u­lus.

The in­ten­sive sell­ing in China had come amid signs its se­cu­ri­ties reg­u­la­tor was making a fresh clam­p­down on lever­aged buy­ing and com­bined with data show­ing a 4.6 per­cent drop in prof­its among big in­dus­trial firms. The min­ing in­dus­try was the lag­gard with prof­its down 56.3 per­cent in the first 10 months of the year. Over­all it was also the fifth straight monthly drop in prof­its, un­der­scor­ing the pres­sure cur­rently on China’s gi­ant econ­omy.

The slump in Shang­hai stocks brought a 25 per­cent re­bound rally since late Au­gust to a shud­der­ing halt and con­trib­uted the lion’s share of a 1.1 per­cent weekly drop in MSCI’s broad­est in­dex of Asi­aPa­cific shares out­side of Ja­pan.

Ja­pan’s Nikkei closed down 0.3 per­cent too though it ended the week marginally highly to ex­tend a win­ning streak that started in the sec­ond half of Oc­to­ber.

The jit­tery China mood en­sured euro-zone bond yields, which move in­verse to price, nudged lower again as in­vestors also kept po­si­tion­ing for the next salvo of ECB stim­u­lus, ex­pected at the cen­tral bank’s Dec. 3 meet­ing. They are pay­ing more than ever for the priv­i­lege of own­ing shorter-term Ger­man, French, Dutch gov­ern­ment bonds and yields on bench­mark 10-year yields are also sliding again.

“The mar­ket is an­tic­i­pat­ing the ECB to act swiftly and de­ci­sively next week,” said DZ Bank strate­gist Chris­tian Lenk, high­light­ing bets that Mario Draghi and his col­leagues will con­tinue to hike up the cost of sit­ting on cash for banks.

“If you take the two-year Schatz (Ger­man) yield as the bench­mark for the (ECB) de­posit rate, the mar­ket expects a cut in the de­posit rate by 20 bps to mi­nus 0.40 per­cent, which we think is think­able.” —Reuters

HANGZHOU: An in­vestor walks past a screen show­ing stock mar­ket move­ments in a stock firm in Hangzhou, east China’s Zhe­jiang prov­ince yes­ter­day. Chi­nese shares closed down more than five per­cent on Novem­ber 27, af­ter in­quiries were an­nounced into sev­eral ma­jor bro­ker­age firms. — AFP

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