China’s financial markets reopened to a battering yesterday. A gauge of the nation’s stocks plunged almost 8 percent, commodity futures from iron ore to crude oil sank by the daily limit, and the yuan weakened past a key level against the US dollar.
Officials tried to ward off panic selling before trading resumed through injections of liquidity into the money market, cutting borrowing rates, restricting some selling by brokerages and appealing for calm.
All to little avail. Spooked by the mounting death toll from the coronavirus and China’s drastic efforts to contain it — two-thirds of the economy remains shut down this week — investors ran for the exits.
It was the first chance mainland investors had since Jan. 23 to trade, due to the extended Lunar New Year break. Many stocks immediately fell by the 10 percent daily limit — almost 3,500 at the last count. While the longevity and scale of the outbreak remain hard to predict, there is little doubt it will have a major effect on the world’s second-largest economy, at least in the short term.
“The pandemic is not something that will only impact the market for just a few days, it’ll last for a while,” China Vision Capital Management Co (中國華新資本管理) president Sun Jianbo (孫建波) said in Beijing.
The effects were felt across the nation’s markets. China’s benchmark iron ore contract declined by its daily limit of 8 percent, while crude and palm oil also sank by the maximum allowed. The yield on China’s most actively traded 10-year government bonds dropped the most since 2014. The yuan tumbled more than 1 percent to weaken past 7 yuan per US dollar.
The CSI 300 Index of companies listed in Shanghai and Shenzhen closed 7.9 percent lower after falling as much as 9.1 percent. The Shanghai Composite Index shed 7.72 percent, or 229.92 points, to 2,746.61 and the Shenzhen Composite Index dropped 8.41 percent, or 147.81 points, to 1,609.00.
Firms linked to tourism and travel were among the worst hit, with energy, telecoms and tech companies also well down, while more than 2,600 stocks fell by their daily 10 percent limit.
“It is really hard to trade stocks,” Beijing WanDeFu Investment Management Co (北京萬得富投資管理) chairman Li Shuwei (李樹偉) said. “It’s impossible to predict how this disease will develop. Even the experts have no clear idea when the outbreak will end, let alone stock traders. It’s too early to buy stocks right now and it’s also difficult to sell as all shares are limit down. So I will just have to wait and see.”
The death toll from the virus has now topped 360, with more than 17,000 confirmed cases in the country.
China’s central bank yesterday unexpectedly lowered the interest rates on reverse repurchase agreements by 10 basis points, with the authorities seeking to ensure ample liquidity as the outbreak’s effect intensifies.
The People’s Bank of China said on its Web site that it was lowering the seven-day reverse repo rate to 2.4 percent from 2.5 percent, and cutting the 14-day tenor to 2.55 percent from 2.65 percent.
The China Securities Regulatory Commission also told some brokerages that their proprietary traders are not allowed to be net sellers of equities this week, people familiar with the matter said.
Yesterday, brokerages were only allowed to sell to meet redemptions by investors, the people said.
In addition, the commission suspended securities lending, one of the few short selling tools available in China, until further notice, the people said.
There was red on the boards elsewhere in Asia. Tokyo was 1 percent lower, while Sydney, Singapore, Wellington and Taipei all shed more than 1 percent. Jakarta lost 0.6 percent, Bangkok dropped 0.3 percent, Manila eased 0.6 percent and Seoul was flat.
However, Hong Kong edged up after losing almost 6 percent in three days last week, while Mumbai also rose slightly.
Additional reporting by AFP
Hon Hai Precision Industry Co (鴻海精密) yesterday said that its research institute has launched its first advanced artificial intelligence (AI) large language model (LLM) using traditional Chinese, with technology assistance from Nvidia Corp. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), said the LLM, FoxBrain, is expected to improve its data analysis capabilities for smart manufacturing, and electric vehicle and smart city development. An LLM is a type of AI trained on vast amounts of text data and uses deep learning techniques, particularly neural networks, to process and generate language. They are essential for building and improving AI-powered servers. Nvidia provided assistance
GREAT SUCCESS: Republican Senator Todd Young expressed surprise at Trump’s comments and said he expects the administration to keep the program running US lawmakers who helped secure billions of dollars in subsidies for domestic semiconductor manufacturing rejected US President Donald Trump’s call to revoke the 2022 CHIPS and Science Act, signaling that any repeal effort in the US Congress would fall short. US Senate Minority Leader Chuck Schumer, who negotiated the law, on Wednesday said that Trump’s demand would fail, while a top Republican proponent, US Senator Todd Young, expressed surprise at the president’s comments and said he expects the administration to keep the program running. The CHIPS Act is “essential for America leading the world in tech, leading the world in AI [artificial
DOMESTIC SUPPLY: The probe comes as Donald Trump has called for the repeal of the US$52.7 billion CHIPS and Science Act, which the US Congress passed in 2022 The Office of the US Trade Representative is to hold a hearing tomorrow into older Chinese-made “legacy” semiconductors that could heap more US tariffs on chips from China that power everyday goods from cars to washing machines to telecoms equipment. The probe, which began during former US president Joe Biden’s tenure in December last year, aims to protect US and other semiconductor producers from China’s massive state-driven buildup of domestic chip supply. A 50 percent US tariff on Chinese semiconductors began on Jan. 1. Legacy chips use older manufacturing processes introduced more than a decade ago and are often far simpler than
Gasoline and diesel prices this week are to decrease NT$0.5 and NT$1 per liter respectively as international crude prices continued to fall last week, CPC Corp, Taiwan (CPC, 台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. Effective today, gasoline prices at CPC and Formosa stations are to decrease to NT$29.2, NT$30.7 and NT$32.7 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while premium diesel is to cost NT$27.9 per liter at CPC stations and NT$27.7 at Formosa pumps, the companies said in separate statements. Global crude oil prices dropped last week after the eight OPEC+ members said they would
RSS