Like George Soros who sold his stocks to Alibaba an e-commerce giant more like Chinese amazon and invested in US market. China’s richest traders are cashing out of stocks, while a record drop in yuan positions at the central bank and financial institutions last month signalled investors are moving money out of the country.
Shares in China and Hong Kong fell yesterday as the yuan eased against the dollar, reigniting fears that Beijing may be intent on a deeper devaluation of the currency despite the central bank’s comments that it sees no reason for a further slide.
Analysts have maintained that market volatility would have a limited impact on China’s economy. A cheaper yuan is expected to aid exports for the world’s second-largest economy, which faces a dim outlook but it also underlined concerns about the current status of the Chinese economy.
All four sub-indices lost ground, with the Commerce and Industry sub-index falling the most by 2.25 percent, followed by the Finance down 1.61 percent, the Properties 1.14 percent, and the Utilities 0.82 percent. Republication or redistribution of content provided by EconoTimes is expressly prohibited without the prior written consent of EconoTimes, except for personal and non-commercial use. This is the first time since China embraced a free-market economy 30 years ago that state measures have not worked. The Nasdaq composite index shed down 2.8% of its value.
European shares moved lower across the board, led by Germany’s DAX index, which lost 1.6%.
And while we haven’t seen any mention of it in the market commentary we’ve been reading, reports that last week’s explosions at the Chinese port of Tianjin could generate insurance losses between $1 billion and $1.5 billion could be preying on investors’ minds.
The Chinext Price Index, the benchmark for the small-capitalization market rose 2.7% to 2,571.
Chinese officials are targeting economic growth of 7pc this year, though many China watchers estimate that growth is far more tepid than Beijing’s GDP numbers would suggest.
China’s cooling factory activity is likely to heap pressure on prices of commodities, which have plumbed new lows in recent weeks, particularly oil and industrial metals like copper and aluminum.
The yuan has fallen 3 percent against the dollar since the eve of the devaluation, but that marks only a partial reversal of its gains over the past 12 months, especially against currencies of major trading partners Japan and the euro zone.
Benchmark U.S. crude dropped 24 cents to $41.03 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price global oils, tumbled 60 cents to $46.02 in London after losing 54 cents the previous day to close at $46.62.