Asian shares move off three-year lows

The Pak Banker - - INTERNATIONAL BUSINESS/SPORTS -

Volatile global mar­kets showed ten­ta­tive signs of a respite from the re­cent blood-let­ting on Tues­day as bar­gain hun­ters helped Asian stocks off three-year lows, though share mar­kets in China, epi­cen­ter of the rout, suf­fered another big sell-off.

The MSCI s broad­est in­dex of Asi­aPa­cific shares out­side Ja­pan .MIAPJ0000PUS rose 1.1 per­cent af­ter an ini­tial dip to three-year lows, par­ing about a quar­ter of Mon­day s losses. Ja­pan s Nikkei .N225, which saw ex­tremely volatile trad­ing, ended 4 per­cent down. Euro­pean shares are seen to open higher, with spread-bet­ters ex­pect­ing more than 2 per­cent gains in Ger­many s DAX .GDAXI and a rise of above 1 per­cent in Bri­tain s FTSE .FTSE. "The re­cent tur­moil has left even the most hard­ened trader gasp­ing for air. And there s prob­a­bly more to come," said Fred­eric Neu­mann, HSBC s co-head of Asian eco­nom­ics re­search, in a note to clients. "China s econ­omy con­tin­ues to slow and the (U.S.) Fed may still hike rates be­fore the end of the year. That puts fur­ther cracks into the two main growth pil­lars for the world econ­omy of re­cent years: Chi­nese de­mand (in­clud­ing com­modi­ties) and easy money," Neu­mann said, even as he added that a re-run of Asia s fi­nan­cial cri­sis in the late 1990s was un­likely.

U.S. stock fu­tures ESc1 gained 2.0 per­cent, aid­ing per­for­mance in some mar­kets as sig­nal­ing that New York mar­kets which plunged on Mon­day will open stronger later in the day. "There ap­pears to be buy­back as many mar­kets look over­sold af­ter pan­icky selling in the last few days. Even the shares that had lit­tle busi­ness ties with China were sold," said Yukino Ya­mada, se­nior strate­gist at Daiwa Se­cu­ri­ties.

Main­land Chi­nese shares had another calami­tous day, with the Shang­hai Com­pos­ite In­dex .SSEC fall­ing another 7 per­cent and break­ing be­low the key psy­cho­log­i­cal level of 3,000. The in­dex fell 15 per­cent the pre­vi­ous three days, in­clud­ing an 8.5 per­cent col­lapse on Mon­day.

"Global in­vestors are can­ni­bal­iz­ing each other. Call­ing it a mar­ket dis­as­ter is not an over­state­ment," said Zhou Lin, an an­a­lyst at Hu­atai Se­cu­ri­ties. "The mood of panic is dom­i­nat­ing the mar­ket ... And I don t see any signs of mean­ing­ful gov­ern­ment in­ter­ven­tion."

Un­der­lin­ing con­cerns about China, Ja­panese Fi­nance Min­is­ter Taro Aso said on Tues­day he hoped Bei­jing would take ac­tion to sta­bi­lize its econ­omy and that Tokyo had no plans for now to un­veil its own new eco­nomic stim­u­lus pack­age.

MSCI s all coun­try world in­dex .MIWD0000PUS hov­ered near 10 1/2month low marked on Mon­day, when it had fallen 3.8 per­cent, its big­gest fall in al­most four years.

Global share mar­kets have been hit by wor­ries that the Chi­nese econ­omy, the most im­por­tant en­gine for the world econ­omy, was grow­ing at a much slower pace than Bei­jing s 7 per­cent tar­get for 2015. In­vestors are also un­nerved by un­cer­tainty over U.S. mon­e­tary pol­icy. The Fed­eral Re­serve has said it plans to raise in­ter­est rates this year for the first time in al­most a decade.

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