HONG KONG: Shanghai stocks swung sharply again on Tuesday, fuelled by ongoing worries about China’s economy while most other Asian markets ended extending losses as one of the worst starts to a year shows little sign of letting up.
Having sunk more than five percent Monday—taking its losses this year to almost 15 percent already—Shanghai rallied in the first few minutes before quickly see-sawing in and out of positive territory through the day.
The swift movements have become common on the volatile index, which has been hammered by a string of weak economic data out of China, while authorities’ bungling of last week’s rout has also sowed doubt.
Beijing’s weakening of its yuan currency—raising questions about the opaqueness of its exchange rate policy—also played a key role in the equities downturn.
That has in turn led to massive losses around the world, with several major bourses suffering their worst start to a year on record.
On Tuesday the rate at which banks charge each other to borrow yuan in Hong Kong surged 53 percentage points to a record high of 67 percent, with speculation China’s central bank was buying huge amounts of the unit.
“Worries about China persist,” Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors, told Bloomberg News.
And he warned: “It’s too early to say that we’ve found the bottom until we see more stability in the Chinese currency and until we see more confidence regarding global growth.”
Shanghai ended 0.2 percent higher but Hong Kong, which also tumbled Monday, slipped 0.8 percent in the afternoon.
Tokyo, which was closed Monday for a holiday, slipped 2.7 percent as dealers there played catch-up with the rest of the region and the yen strengthened against the dollar.
The Japanese unit has risen more than 2 percent on the greenback so far this year.
Sydney slipped 0.1 percent by the end of trade and Seoul lost 0.2 percent.
In Hong Kong analysts said the People’s Bank of China had likely stepped in to prop up the yuan and fend off speculators as the unit tumbles.
Albert Leung, a Hong Kong-based rates strategist at Nomura Holdings, added that he expected yuan interest rates to “remain highly volatile in the next couple of days”. AFP