Shares mixed as dealers mull yuan devaluation
Asian shares were mixed on Tuesday, with Shanghai and Hong Kong ending rollercoaster sessions flat as investors weighed news China’s central bank is devaluing its currency while other regional markets fell.
Tokyo closed down 0.42 percent, or 87.94 points, at 20,720.75 while Sydney fell 0.65 percent, or 35.96 points, to close at 5,473.2.
South Korean shares fell 0.82 percent after disappointing earnings, with the benchmark KOSPI index ending down 16.52 points at 1,986.65.
But Hong Kong and Shanghai both ended see-saw sessions around the flatline, after China announced a sharply lower daily ref- erence rate for the yuan against the U.S. dollar.
The 1.86 percent cut — the largest since the yuan was unpegged from the greenback in 2005 — comes as speculation mounts China is preparing to widen its currency trading band for the first time since March 2014.
Weak trade and inflation data released last weekend reinforced concerns that growth is slowing in the world’s second-largest economy.
In Hong Kong, the benchmark Hang Seng Index edged down 22.91 points to end the day at 24,498.21 on turnover of HK$96.1 billion (US$12.4 billion).
On the mainland, the benchmark Shanghai Composite Index dipped 0.51 points to close at 3,927.91 on turnover of 712.3 billion yuan (US$114.3 billion).
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, added 0.41 percent, or 9.43 points, to 2,284.27 on turnover of 623.1 billion yuan.
Chinese aviation shares were hit hard by the yuan move on fears the weaker currency could hurt profits and make servicing their dollardenominated debt more expensive.
In Hong Kong, China Southern Airlines led the slump to end down 18 percent at HK$6.76, while China Eastern Airlines lost 16.5 percent to close at HK$5.45 and Air China sank 13 percent to HK$7.40.
On the mainland Shanghai Juneyao Airlines dropped 2.47 percent to 61.67 yuan and Hainan Airlines lost 3.52 percent to 5.48 yuan.
Shanghai stocks surged Monday on news Beijing is making fresh moves to support equities, and on hopes of an overhaul of the country’s inefficient government-backed companies.
Beijing has unleashed an unprecedented wave of measures to stop a rout in its share markets, moves which central bank data showed Tuesday had driven up bank lending some 17 percent to 1.48 trillion yuan between June and July.
China Weighs on European Stocks Despite Greek Deal
fell Tuesday after a surprise devaluation of the yuan affected key exporters to China such as auto and luxury goods groups, offsetting news of a technical agreement to Greece’s bailout deal.
A survey indicating that investor sentiment in Germany fell sharply in August also weighed.
London’s benchmark FTSE 100 index dropped 0.67 percent to stand at 6,691.33 points in late morning deals.
Frankfurt’s DAX 30 slid 1.23 percent to 11,462.88 points and the CAC-40 in Paris lost 1.11 percent to 5,137.71 compared with Monday’s close.
Athens’ main index grew 1.79 percent to 702.62 points.
The devaluation weighed on several sectors, notably the auto and luxury goods markets that rely heavily on Chinese demand.
In Paris, shares in LVMH Moet Vuitton shed 3.87 percent to 167.45 euros, Peugeot slid 3.59 percent to 17.70 euros and Renault gave up 3.15 percent to 85.40 euros.
In Frankfurt, Daimler shed 3.83 percent to 81.04 euros and BMW retreated by 3.78 percent to 89.87 euros.
Burberry meanwhile slumped 2.74 percent to 1,563 pence in London, where miners continued to fall under the pressure of weaker Chinese growth, with Glencore down 2.14 percent at 201.80 pence and BHP Billiton losing 1.74 percent to 1,188 pence.
Safe- haven gold f etched US$ 1,110.35 compared to US$1,094.78 late Monday. In other markets: — Bangkok fell 0.83 percent, or 11.81 points, to 1,408.32.
— Malaysia’s main index lost 1.07 percent, or 17.66 points, to close at 1,636.71.
— Singapore closed down 1.36 percent, or 43.60 points, to 3,153.06.
— Jakarta ended down 2.66 percent, or 126.36 points, at 4,622.59.
— Mumbai fell 0.84 percent, or 235.63 points, to 27,866.09.
— Wellington ended down 0.73 percent or 42.67 points at 5,822.35.
— Manila added 0.48 percent, or 36.10 points, to 7,570.45.