HONG KONG: Chinese shares plunged more than six percent on Thursday as economic clouds settled over a G20 meeting in Shanghai, but oil-driven gains helped Tokyo close higher while European markets rebounded at the open.
Shanghai fell the most in a month, hit by tightening liquidity and concerns a rally that has added 10 percent since mid-January was overdone given stalling growth in the world’s number two economy.
Weakness in China, a key driver of global growth, and spasms in the oil market are expected to hang over a two-day meeting of G20 finance ministers in commercial hub Shanghai starting on Friday.
The gloomy outlook for the global economy has added to pressure on central bankers to unleash fresh monetary firepower to help stimulate growth and reassure investors.
The Shanghai benchmark tumbled 6.41 percent by Thursday’s close, while the Shenzhen index on China’s second exchange dived 7.34 percent.
Hong Kong retreated for a third day, closing down 1.58 percent.
“The economy hasn’t shown signs of stabilisation and policies are still coming out one after another,” Central China Securities analyst Zhang Gang told AFP.
Energy and materials companies led Wall Street higher on Wednesday, as a rise in crude prices helped US stocks claw back ground from their biggest fall in two weeks.
That helped Japanese shares add 1.41 percent on Thursday— their first gain in three days—despite an almost 15 percent slump in electronics maker Sharp after it accepted a takeover by the parent company of Taiwan’s Foxconn.
European stocks opened sharply higher, with London adding 1.3 percent and Paris 1.6 percent as they rebounded from heavy losses in the previous session.
Cooling growth in Asia’s largest economy, a key importer of raw materials, has sent commodity and energy prices spinning and saw global stocks notch one of their worst starts to a year in living memory.
The Asian regional shares benchmark, the MSCI Asia Pacific Index, has been at its most volatile in four years over the past month, according to Bloomberg News.
Falling commodity prices have hurt exporters like Australia, whose currency slumped Thursday on news that companies are planning to invest their least in nine years.
Adding to the concerns, the International Monetary Fund warned on Wednesday the world economy is “highly vulnerable,” and said it would likely cut its 2016 growth forecast of 3.4 percent.
US Treasury Secretary Jacob Lew has said G20 finance ministers will not deliver an “emergency response” to the market turmoil this week, as the world was not in crisis mode just yet.
“It would be nice to see some collective statement from the major central banks that they’re aware of the problems,” Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney, told Bloomberg News.
“I don’t hold out a lot of hope. We’re not in enough of a crisis yet to see a crisis response.”
Reflecting the concerns, oil prices eased in Asia on Thursday, resuming their downward trend after news US gasoline stocks fell helped revive prices in the previous session.
Crude has fallen more than 13 percent this year on concerns of a lasting global supply glut. News that Iran and Saudi Arabia would not be willing to curtail production saw prices plunge on Tuesday.