Global rout in stocks markets deepening
China sparks selling frenzy
A WAVE of selling gripped global markets as the rout in all but the safest assets deepened.
Chinese shares tumbled by the most since 2007, stocks in Germany headed for a bear market and commodities fell to a 16-year low. Russia’s rouble led a sell-off in emergingmarket currencies, while the yen strengthened and 10-year treasury yields slid below 2 percent for the first time since April.
“Everyone seems to be selling off, and there’s panic,” said Michael Woischneck, who helped oversee the equivalent of $7.1 billion (R91.98bn) at Lampe Asset Management in Düsseldorf, Germany.
“There’s no rational choice anymore, no rational reaction. The Americans will add to the European selling.”
More than $5 trillion (about R65 trillion) has been erased from the value of global equities since China unexpectedly devalued the yuan on August 11, fuelling concern that the slowdown in the world’s second-largest economy is worse than anticipated. The rout is shaking confidence that the global economy will be strong enough to withstand higher US interest rates.
Developing economies bore the brunt of the sell-off, with the MSCI emerging markets index sliding 4.6 percent at 10.45am in London, headed for the biggest one-day drop since September 2011. Basic-resource producers led losses as Brent crude tumbled to $45 a barrel. Treasury 10-year note yields fell as low as 1.97 percent.
“We’re definitely getting a lot of calls from clients,” Michele Santangelo, a money manager at Vunani Private Clients, said in Johannesburg.
“You’re seeing a lot of capitulation, people selling for the sake of selling and wanting to get out of the market.”
Shares in all but one firm fell in the Stoxx Europe 600 index, driving the gauge down 2.7 percent. Germany’s DAX index retreated 2.4 percent, taking the decline from its peak in April to more than 20 percent. Standard & Poor’s 500 index futures shed 1.9 percent.
Investors are selling their most-loved stocks, with Apple and Netflix losing more than 4 percent in early New York trading. The sell-off is set to worsen, according to Doug Ramsey, the chief investment officer of Leuthold Weeden Capital Management, whose quantitative research into market breadth, valuation and investor sentiment foreshadowed the drubbing in American stocks last week.
In Asia, the Shanghai composite index slid 8.5 percent and Hong Kong’s Hang Seng index fell 5.8 percent, tumbling further into a bear market. – Bloomberg