HONG KONG: Asian markets mostly fell on Tuesday owing to growing concerns about a liquidity crisis in China, although Shanghai managed to claw back some ground after sinking more than 5 percent at one point.
The dollar also lost its upward momentum against the yen after seeing a pull-back in New York City, following comments from US Federal Reserve officials indicating the bank would not immediately wind down its stimulus program.
Tokyo fell 0.72 percent, or 93.44 points to 12,969.34, Seoul lost 1.02 percent, or 18.38 points to close at 1,780.63, and Sydney slipped 0.28 percent, or 13.1 points to 4,656.0—it’s lowest close in six months.
Shanghai was 0.19 percent lower, giving up 3.73 points to end at 1,959.51, with bargain-hunting helping it bounce from a second successive fall of more than 5 percent earlier in the day.
But Hong Kong added 0.21 percent, or 41.74 points to end at 19,855.72, reversing earlier losses.
With no other news to influence buying, the focus was on China, where investors have been spooked by a cash crunch in the financial system that has raised fears banks will cut back on loans, which could in turn drag on the economy.
The central People’s Bank of China added to those worries on Monday, when it ruled out providing any fresh money to bolster markets and ordered lenders to get their own houses in order.
National Australia Bank said: “The [central bank]remains reluctant to intervene and said that the onus was on lenders to better manage their balance sheets and that liquidity was at a ‘reasonable level.’”
“The risks to the Chinese growth outlook are rising, but it looks like the new leadership in China may be willing to accept some short-term pain in an attempt to address the financial risks in the banking system,” it added.
Wall Street provided a negative lead, with the three main indices ending well down. The Dow fell 0.94 percent, the S&P 500 tumbled 1.21 percent, and the Nasdaq shed 1.09 percent.
On forex markets, the dollar gave back its early gains, falling further after dipping in New York on comments from Fed officials that sought to ease concerns over its monetary easing policy.
Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, released a statement and held a conference call with reporters to argue that it would continue the bond-buying until the jobless rate fell further.
And Dallas Federal Reserve chairman Richard Fisher said that the central bank was not exiting its stimulus, only scaling it back.
The greenback was at 97.30 yen, against 97.74 yen in New York City on late Monday. The euro bought $1.3125 and 127.80 yen against $1.3124 and 128.28 yen. AFP