Asian shares fall as China weakens currency further
Asian shares tumbled on Wednesday as investors fretted over the impact which a second cut in China’s currency in as many days will have on economies closely tied to the Asian giant.
Hong Kong lost 2.38 percent, or 582.19 points, to end at 23,916.02, while Shanghai dropped 1.06 percent, or 41.59 points, to 3,886.32 while the Shenzhen Composite Index, which tracks stocks on China’s second exchange, fell 1.54 percent, or 35.09 points, to 2,249.18.
Other regional markets also lost ground, with Tokyo closing down 1.58 percent, or 327.98 points, at 20,392.77, while Sydney ended 1.66 percent lower at 5,382.10. Seoul ended 0.56 percent, or 11.8 points, lower at 1,975.47.
The second yuan cut on Wednesday brings the reductions this week to 3.5 percent — the largest in more than two decades — in a move widely seen as designed to boost China’s flagging economy.
Concerns about China’s stalling growth were compounded on Wednesday when three key indicators — industrial production, retail sales and fixed asset investment — all came in below market expectations.
China-focused Stocks Fall
Wall Street tumbled Tuesday on the initial devaluation, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite Index all closing down around one percent or more.
In Tokyo share trading Wednesday, automaker Toyota fell 1.66 percent to 7,987 yen, while Nissan, also dependent on China for sales, dropped 2.09 percent to 1,168.5 yen.
Airlines lost ground in Shanghai on worries that a weaker yuan will raise the cost of servicing U.S. dollardebt. Air China fell 5.04 percent to 10.92 yuan and Hainan Airlines dipped 3.28 percent to 5.30 yuan.
In Hong Kong, development stocks also took a hit from debt concerns, with with China Resources Land dropping 7.92 percent to HK$19.80 and China Overseas Land & Investment giving up 8.51 percent to HK$23.10.
Safe- haven gold f etched US$ 1,117.50 compared to US$1,110.35 late Tuesday.
In individual results, Commonwealth Bank of Australia said fullyear net profit rose five percent to a record AU$9.063 billion (US$6.62 billion). Shares halted trading ahead of a AU$5 billion capital-raising.
The Hong Kong stock exchange said its first-half earnings surged 73 percent to a record high as it reaped the benefits of a link-up with the Shanghai bourse.
European Stocks Slump on China
European stock markets slumped on Wednesday, mirroring the performance across Asia after China further devalued its currency and reported more poor data.
Shares in miners, autos and luxury good groups, which rely heavily on Chinese demand, fell sharply for a second day.
London’s benchmark FTSE 100 index dropped one percent to stand at 6,597.75 points around midday in the capital, after the latest British unemployment data came in at 5.6 percent, unchanged from last month.
Frankfurt’s DAX 30 slid 2.01 percent to 11,066.93 points and the CAC-40 in Paris shed 1.97 percent to 4,998.65 compared with Tuesday’s close. In other markets:
— Mumbai fell 1.27 percent, or 353.83 points, to close at 27,512.26.
Infosys rose 3.39 percent to 1141.75 rupees but Vedanta plummeted 8.03 percent to 113.90 rupees.
— Singapore closed down 2.90 percent, or 91.57 points, to 3,061.49.
Agribusiness company Wilmar International eased 1.30 percent to SG$3.03 while real estate developer Capitaland fell 4.69 percent to SG$3.05.
— Kuala Lumpur fell 1.64 percent, or 26.78 points, to close on 1,609.93.
Sime Darby fell 1.47 percent to 8.04 ringgit, Malaysian Banking fell 1.29 percent to 8.41 ringgit, and Petronas Gas lost 0.46 percent, ending at 21.48 ringgit.
— Jakarta ended down 3.10 percent, or 143.10 points, at 4,479.49.
Bank Mega gained 7.41 percent to 2,900 rupiah while textile and garment company Sri Rejeki Isman fell 13.43 percent to 303 rupiah.
— Wellington fell 1.12 percent, or 65.14 points, to 5,757.21.
Spark New Zealand was 2.46 percent off at NZ$2.77 while Fletcher Building closed 2.05 percent down at NZ$7.64.
— Manila lost 0.99 percent, or 75.02 points, to 7,495.43.
Top-traded Semirara Mining and Power rose 1.96 percent to 130 pesos, but BDO Unibank lost 1.92 percent to 102 pesos and Manila Electric fell 2.09 percent to 300 pesos.
Bangkok was closed for a public holiday.