Bulls And Bears

China market panic spreads to Asian bourses

Traders retreat on fears that the Beijing govt will let yuan depreciate further

Asian bourses were again knocked back yesterday as panic returned to the Chinese markets on the back of a weakening yuan.

Traders retreated on fears that Beijing will allow further depreciation in the currency despite the central bank, which devalued the yuan by about 2 per cent in a shock move last Tuesday, saying it sees no reason for a further slide.

The uncertainty sent Shanghai shares plunging 6.15 per cent - its biggest single-day drop since July 27.

The mood wasn't helped by last Friday's announcement by China's securities regulator that the state agency tasked with supporting share prices will reduce buying as the market stabilises.

"Investors ran for the exit when the government failed to step in to support the market," Mr Steve Wang, chief China economist at Reorient Financial Markets in Hong Kong, told Reuters. "The (agency) has become a main player in this market so everyone is watching it. People panic when it stops buying."

The fears in China spilt over into other bourses in the region, which failed to find support from the positive sentiment in Wall Street, which edged up 0.39 per cent overnight.

The Hang Seng Index in Hong Kong fell 1.43 per cent to its lowest in six weeks, while the Nikkei 225 Index lost 0.32 per cent.

The Straits Times Index dropped 17.7 points, or 0.58 per cent, to 3,049.65.

The day's losses were led by Noble Group, the largest commodity trader in Asia, which slumped four cents, or 8.79 per cent, to 41.5 cents, amid a down-swing in the commodities market.

It was also the most active counter with 99.4 million shares traded.

The new low - a level not seen since 2008 - comes after its chief executive told an investors' meeting on Monday that the company was open to selling its core businesses.

Rigbuilders Keppel Corporation and Sembcorp Marine also took a beating as oil prices continued to stay down. KepCorp sank 12 cents, or 1.65 per cent, to $7.15, while SembMarine slid three cents, or 1.17 per cent, to $2.53.

The ongoing political uncertainty in Brazil, where President Dilma Rousseff is facing the threat of impeachment, appears to have put a dampener on the companies' performance as well.

The companies have contracts with state oil company Petrobras.

Offshore services provider Ezion Holdings logged another day of heavy losses, plummeting six cents, or 9.09 per cent, to 60 cents - its lowest since January 2012.

On the other side of the ledger, agri-business Olam International led the day's gains, rising three cents, or 1.67 per cent, to $1.83.

Telco SingTel climbed two cents, or 0.5 per cent, to $4.03.

Overall trade on the exchange totalled $1.17 billion, with 1.53 billion shares changing hands.

A version of this article appeared in the print edition of The Straits Times on August 19, 2015, with the headline 'China market panic spreads to Asian bourses'. Print Edition | Subscribe