Asia stocks retreat but Shanghai rebounds

HONG KONG: Shanghai stocks saw another day of volatility yesterday, swinging sharply from big early losses to end on a high while most other Asian bourses tracked a Wall Street slump in the latest rout of world markets.

Any hope Wednesday’s regional rally might presage a recovery from 2016’s bloodbath was wiped out with an immediate sell-off in the opening minutes.

Tokyo plunged almost 4% in the first hour and Shanghai fell below its lowest levels of the summer rout.

However, Shanghai ended slightly more positively -- rising 2% -- as investors moved to pick up cheap stocks.

“The market has fallen too much and there are some investors looking for bargains,” said Dai Ming, a fund manager at Hengsheng Asset in Shanghai.

The state-backed Securities Times also said 28 firms on the ChiNext index of small caps in Shenzhen had pledged not to sell for six months to stabilise markets while Bloomberg reported authorities had vowed to more closely monitor share sales by major stakeholders.

It added that the government had likely not been behind the rebound by buying key state firms.

Shanghai slumped almost 3% in the morning session --meaning it had lost about 20% since a December peak and making it the worst performer among 93 benchmark indexes tracked by Bloomberg.

It lost 2.4% Wednesday despite a better-than-forecast Chinese trade report.

The broad-based sell-off in Asia came after after Wall Street’s three main indexes saw big losses, with energy firms taking a hammering again as oil prices hit lows not seen since the first half of 2004.

Japan’s Nikkei closed down 2.7% and Sydney shed 1.6% while Seoul was 0.9% lower and Hong Kong lost 0.4% in late trade -- but all improvements from the morning session.

Energy companies, which were slammed in early exchanges, also clawed back as oil prices saw a slight improvement in the afternoon. CNOOC and PetroChina in Hong Kong shifted into positive territory, while Santos and Rio Tinto in Sydney more than halved their losses.

But there remains unease. Michael McCarthy, chief strategist at CMC Markets in Sydney, said: “It’s hard to get bullish at this stage.

News that US stockpiles had risen last week added to downward pressure on oil. The Brent contract on Wednesday fell below $30, a day after the US benchmark West Texas Intermediate (WTI) did the same.

But the two were higher in the Asian afternoon. WTI gained 1.3% and Brent added 0.4%.