• Home
• /
• Economy
• /
• Business

Chinese equities continue to give markets the creeps

Seoul - Another Shanghai drop stirs jitters on health of No.2 economy

Another slump on China's main Shanghai stock index amid renewed concerns over the state of the world's No.2 economy weighed on global markets on Tuesday.
The index plunged 6.2 per cent to 3,748.16 for its largest fall since an 8.5 per cent dive on July 27, which was itself the biggest slide in eight years.
Major Middle East stock markets were also hit.
The plunge in Chinese shares came even as the government took support measures this summer as the index's sizzling yearlong rally reached unsustainable heights and began a dramatic fall in June.
To halt the fall, the government imposed a ban on major shareholders from selling any of their shares.
But the stability was short-lived as the sell-offs restarted, rattling other financial markets.
"All the news out of China recently has done nothing to restore confidence in its financial markets, and the ripple effect can be felt in Europe," said David Madden, market analyst at IG.
Saudi Arabia's main stock index fell 2.9 per cent to a seven-month closing low of 8,197 points.
Dubai's index dropped 2.5 per cent to a four-month low of 3,828 points, falling below technical support at its May low of 3,913 points. Abu Dhabi's main index fell two per cent, its biggest daily loss since early January.
Qatar's market slipped 0.6 per cent, still supported by expectations of more foreign investment after its weighting in MSCI's emerging markets index was increased.
Egypt's leading index dropped 2.6 per cent to 7,398 points, its lowest close since February 2014, falling below chart support at its July low of 7,527 points. Elsewhere in the Gulf, Oman lost 0.5 per cent to 6,191 points, while Bahrain fell 0.2 per cent to 1,329 points.
In Europe, Britain's FTSE 100 dropped 0.5 per cent to 6,515 while Germany's DAX fell 0.4 per cent to 10,897. The CAC-40 in France was 0.4 per cent lower at 4,963.
US stocks followed world markets lower. The Dow Jones industrial average fell 23 points, or 0.1 per cent, at 17,524 as of 10:05am Eastern. The Standard & Poor's 500 index slipped two points, or 0.1 per cent, to 2,100, and the Nasdaq composite sank 14 points, or 0.3 per cent, to 5,078.
As Greece's bailout appears to be inching closer toward resolution, China has become the main concern in financial markets.
The surprise move last week by the country's monetary authorities to devalue the yuan is expected to aid Chinese exports and help make the Chinese currency more responsive to market forecasts.
But it has also renewed questions about the outlook of the world's second-largest economy. The prices of oil, metal and other commodities fell as global demand was expected to be weak.
Other Asian stock markets finished lower. Japan's Nikkei 225 dipped 0.3 per cent to 20,554.47 and South Korea's Kospi declined 0.6 per cent to 1,956.26. Hong Kong's Hang Seng index sank 1.4 per cent to 23,474.97 while Australia's S&P/ASX 200 fell 1.2 per cent to 5,303.10. Stocks in Taiwan and Southeast Asia also fell.
Trading in currency markets was similarly tepid with the euro 0.1 per cent lower at $1.1061 and the dollar 0.2 per cent down at ¥124.25.