Welcome to a SCMP’s live markets blog. The heated sensitivity of new weeks has each possibility of remaining a core underlying thesis of activity. Investors are increasingly focused the broader doubt of how this episode might impact a wider economy as many think a equity burble has nonetheless to entirely deflate. We’ll pierce we a pivotal levels, trade statements, cost movement and other developments as they happen.
4:15pm: The Hang Seng index fell in late trade erasing all a gains for a day. The index sealed down 0.09 per cent during 24,498.21. The H-share index also fell in a afternoon to 11,264.64, down 0.24 per cent.
3:35pm: China marketplace indices were choppy today: a Shanghai Composite (orange), Shenzhen Composite (green), CSI300 (purple) and ChiNext (blue) opposite today’s opening. Click to enlarge.
3:33pm: The Hang Seng is trade down 0.09 per cent during 24,498.09. The H-share index is 0.28 per cent weaker during 11,259.5.
3:31pm: Mainland indices seesawed via a day in greeting to a executive bank preference to amalgamate a yuan by scarcely 2 per cent.
The Shanghai Composite index in a finish sealed roughly flat, down 0.01 per cent, during 3,927.91. The CSI 300 index fell 0.43 per cent to 4,066.67 after a wavy session.
The Shenzhen Composite index gained 0.41 per cent to 2,284.27. The ChiNext index slipped 0.29 per cent to 2,698.91.
2:08pm: Shenzhen Composite Index stands during 2,306.61, adult 1.40 per cent or 31.77 points. ChiNext rallies 1.23 per cent, or 33.23 points, to 2,739.95.
2:07pm: Shanghai Composite Index gains 0.566 per cent, or 22.25 points, to 3,950.67. CSI300 Index edges adult 0.261 per cent, or 10.65 points to 4,095.02.
2:05pm: Hang Seng Index adds 0.79 per cent, or 194.46 points, to 24,715.58. H-shares Index stands during 11,411.98, adult 1.07 per cent, or 120.32 points.
1:57pm: As airlines extend their slip in Hong Kong – Air China, China Southern and China Eastern are down between 12 and 17 per cent currently – oil-related bonds are lifting with an uptick in a tellurian price.
China National Offshore Oil Corporation (CNOOC) is a fastest-rising Hang Seng Index stock, adult 5.03 per cent to HK$10.02, while Sinopec Engineering is a top-gaining H-share, adult 8.98 per cent to HK$6.92.
1:40pm: Heng Koon-how, FX strategist with Credit Suisse private banking:
“For now, this looks like a one off 2 per cent debasement of a onshore yuan. The People’s Bank of China matter has done transparent anxiety to a ‘recent array of macroeconomic data,’ implying that they acknowledge that a Jul activity indicators, from PMI to exports, have been weaker than expected.
The initial partial of a matter explains a proclivity of a composition really clearly : origination anxiety to US mercantile recovery, risk of arriving Fed rate hike, strengthening US dollar, weakening euro and Japanese yen, weakening rising marketplace economies and weaker commodity associated currencies, augmenting financial marketplace dynamics.
Needless to say, this pierce by PBoC has a rather disastrous impact on Asian currencies and Antipodeans as a whole. We have been disastrous on rest of Asians and Antipodeans and we stay negative.
We need to highlight that there is obligatory need to sidestep Asian FX risk. This is not customarily a box of USD strength brazen of FED rate hike, though also diseased domestic drivers. Today’s 2 per cent debasement of a on-shore yuan adds to a coercion and flighty mix. Our indicate forecasts for weaker Asians looks approaching to be reached progressing than later. Once again, we see a Malaysian ringgit, Korean Won and Indonesia rupiah as many vulnerable.”
1:32pm: JPMorgan comments on RMB devaluation:
“Today’s proclamation hold a marketplace (including us) by surprise. The probable reasons behind a process actions are a clever onshore yuan appreciation in genuine effective sell rate (REER) tenure has put a lot of vigour on China’s exports.
From Jun 2014 to Jul 2015, a onshore yuan has appreciated in REER tenure by 12 per cent, especially given of US dollar appreciation. In a initial 7 months of a year, exports declined by 0.6 per cent compared to a same duration of final year. Going forward, a banking appreciation will continue to drag on trade growth. It is doubtful that China will grasp a 6 per cent trade expansion aim for this year.
It is a manageable movement to a new trend of weakening banking opposite US dollar in Asia region. In a past 3 months, Malaysia Ringgit unheeded opposite US dollar by 9.4 per cent, followed by Korean won (7.2 per cent), Thai baht (4.6 per cent), Singapore dollar (4.2 per cent), Taiwanese dollar (3.2per cent) and Indonesia rupiah (3.0 per cent).
We see dual probable scenarios for a CNY outlook. In a initial scenario, today’s pierce represents a regime-shift in China’s sell rate system. Going forward, a People’s Bank of China will set a executive relation rate formed on a shutting mark rate on a prior day. Technically, this means CNY will turn a openly floating currency.
In a second scenario, a PBOC will try to re-anchor marketplace expectations. That means a PBOC will sell US dollar in a mark marketplace to forestall daily spots changeable divided from a new executive relation rate. Daily regulating will stay fast in a entrance weeks. In this scenario, a involvement in a FX marketplace will indicate a serve decrease in FX reserve, inspiring bottom income origination on a domestic front.”
1:06pm: Shenzhen Composite Index stands during 2,275.26, adult 0.02 per cent or 0.41 points. ChiNext slips 0.98 or 26.44 points, to 2,680.28.
1:05pm: Shanghai Composite Index sheds 0.431 per cent, or 16.94 points to 3,911.48 during open of afternoon trade. CSI300 Index loses 0.575 per cent, or 23.47 points to 4,060.90.
1:05pm: Hang Seng Index rises 0.92 per cent, or 225.44 points, to 24,746.56 during a open of afternoon trade. H-shares Index stands during 11,451.59, adult 1.42 per cent, or 159.93 points.
1:00pm: Eddie Cheung, Asia FX strategist of Standard Chartered Bank:
“We design markets to sojourn jumpy on concerns that this is a renewed pull to break a on-shore yuan near-term. We trust this one-off devalution is a step serve to forex remodel though do not see it as a new trend devaluation.
This is another step in augmenting a coherence of China’s sell rate, partly to boost the chances of renminbi inclusion in a IMF’s SDR basket by a finish of this year. This also confirms a faith that notwithstanding concerns over expansion and new equity marketplace volatility, a gait of reforms stays on track.
The subsequent step is to dilate a daily trade band. We contend a call that a rope widening from dual per cent to 3 per cent is probable in a subsequent few months.”
12:45pm: Paul Mackel, HSBC Head of Global Emerging Markets FX Research.
“In a view, there could be another vicious care behind today’s announcement. We trust a People’s Bank of China is accelerating reforms to lift a possibility of a RMB’s inclusion in a IMF’s SDR basket.
Although it is not categorically mentioned, it is though accepted that a haven banking can't be a rarely managed one, that could potentially deviating from a underlying elemental value thereby ensuing in contingent instability. That was indeed a risk for USD-CNY, that has been hold really steady, notwithstanding ongoing collateral outflows from China.
Importantly, a change in a regulating resource should not be review as a pointer that China’s authorities are intentionally adopting an onshore yuan devaluation strategy.
In a perspective they have sufficient process ammunition to boost domestic direct to equivalent outmost headwinds. We foresee another 25 basement points process rate cut and 200 basement points haven ratio cut in a second half of 2015. Today’s change in a USD-CNY regulating resource will not block RMB internationalisation efforts.”
12:40pm: HSBC investigate quoting People’s Bank of China QA on a RMB devaluation:
1. The executive bank addressed because it chose a stream timing to remodel a (yuna) fixing. The executive bank highlighted a clever USD and a pointy appreciation in a RMB genuine effective sell rate as a pivotal macro consideration.
In such a context, a executive bank remarkable a USDCNY fixing has shown poignant flaw from marketplace mark rate for a enlarged duration of time, weakening a benchmarking duty of a fix.
As domestic FX marketplace becomes some-more developed, with marketplace makers improved versed with risk government capability, a executive bank believes it is time for a some-more marketplace oriented regulating to improved simulate marketplace direct and supply.
2. The PBoC believed a pointy burst in today’s USD-CNY mid-price is a one off improvement of a fixing, in sequence for it to be closer to a prior days’ prevalent mark rate. The executive bank states that it will closely guard marketplace movements in a nearby destiny to make certain a new regulating resource runs uniformly and to brace marketplace expectations.
3. The PBoC highlighted a subsequent stairs in China’s sell rate resource reforms. These embody vouchsafing a marketplace play a bigger purpose in determining a sell rate, timid from a slight FX interventions, and permitting larger sell rate coherence as good as accelerating unfamiliar sell marketplace growth by broadening forex products, augmenting sell rate trade hours (details not nonetheless announced), introducing competent unfamiliar investors and compelling a singular sell rate in a onshore and offshore markets.
12:25pm: The Hang Seng Index (orange) and H-shares index (purple) from opening to midsession currently – click to enlarge.
12:22pm: The Hang Seng Index sealed a morning trade during 24,752.87, adult 0.95 per cent or 231.75 points. The China Enterprises Index (H-share index) adds 1.51 per cent, or 170.18 points, to 11,461.84.
11:53am: Onshore mark yuan is trade during 6.3154 opposite a US dollar, weaker by 1060 basement points from Monday close. The offshore yuan stands during 6.3598, weaker by 1462 basement points from Monday finish.
11:50am: China indices during midsession today: a Shanghai Composite (orange), Shenzhen Composite (green), CSI300 (purple) and ChiNext (blue). Click to enlarge.
11:39am: In Hong Kong, word bonds are heading banks as financials collect adult to perform strongly today. Also using good are altered metals, with 8 per cent-plus gains for Sino Prosper and Lingbao Gold and 3 per cent-plus for G-Resources, Loco Hong Kong, Zijin Mining and Zhaojin Mining.
11:38am: The Shenzhen Composite Index goes down 0.25 per cent, or 5.8 points to 2,280.64 during a tighten of morning trade. The ChiNext Price Index slips 0.49 per cent, or 13.14 point,s during 2,693.58.
11:37am: The Shanghai Composite Index sealed a morning event during 3,912.92 points, down 0.395 per cent, or 15.50 points. The CSI300 index of Shanghai-Shenzhen vast tip bonds loses 0.475 per cent or 19.40 points to 4,064.97.
11:25am: Hong Kong dollar is trade Tuesday during 7.7543 to a US dollar, nearby tip finish of a banking peg. Euro/dlr weaker by 0.32 per cent during 1.0984. Dlr/yen during 124.68, stronger by 0.04 per cent. Pound/dlr weaker by 0.17 per cent to 1.5566. Australian dollar to US dollar weaker by 1.17 per cent to 0.7326.
11:09am: Airline bonds divebomb currently as a weaker RMB, negligence economy and a batch marketplace pile-up are approaching to strike direct for atmosphere travel.
China Southern Airlines (orange) plummets 13.33 per cent to HK$7.15, Air China (purple) drops 12.69 per cent to HK$7.43, and China Eastern Airlines (green) drops 8.73 per cent to HK$5.96. Hong Kong’s Cathay Pacific Airways (blue) is down 1.18 per cent to HK$18.46.
Click to boost this perspective opposite a Hang Seng (red) and H-shares (yellow) indices.
10:49am: The tip 13 Hang Seng bonds in terms of commission gains are China companies. China Resources Land is out in front, adult 4.92 per cent to HK$22.40. Bank of East Asia is a tip gainer among internal blue chips. Property developers Cheung Kong, Henderson and MTR Corporation route nearby a rear.
Hong Kong Exchanges and Clearing leads market turnover with HK$723 million, gaining 1.1 per cent to HK$220.60, followed by China majors Ping An Insurance, Tencent, ICBC and CCB, all adult some-more than 1 per cent.
10:35am: The Shenzhen Composite Index advances 1.15 per cent, or 26.27 points to 2,301.11. The NASDAQ-style ChiNext Price Index rises 0.75 per cent, or 20.25 points during 2,726.97.
10:34am: The Shanghai Composite Index stands during 3,945.06 points, adult 0.424 per cent, or 16.64 points. The CSI300 index of Shanghai-Shenzhen vast tip bonds rises 0.371 per cent or 15.15 points to 4,099.52.
10:33am: The Hang Seng Index stands during 24,829.94, adult 1.26 per cent or 308.82 points. The China Enterprises Index (H-share index) gains1.99 per cent, or 225.13 points, to 11,516.79.
10:25am: Hong Kong bonds are surging after a RMB cut gave investors additional shopping power. Cathay Pacific Airways is a customarily Hang Seng basic trade down while Air China is a customarily H-shares index batch going backwards.
Several Chinese airlines are being pounded, stability their severe few weeks in a news. Air China is down 6.11 per cent to HK$7.99, China Eastern drops 6.27 per cent to HK$6.12 and China Southern gives adult 6.78 per cent to HK$7.69.
10:23am: For some-more on story on PBoC devaluing a yuan, greatfully click here.
9:55am: China’s income supply M2 for Jul jumped 13.3 per cent from a year earlier, violence economist forecasts of a 11.7 per cent rise, while new yuan loans for a same duration reached 1.48 trillion yuan contra a marketplace accord of 750 billion yuan, says a report Tuesday by a People’s Bank of China.
9:42am: The Shenzhen Composite Index opens during 2,290.39, adult 0.68 per cent, or 15.54 points. The NASDAQ-style ChiNext Price Index adds 0.41 per cent, or 11.11 points to open during 2717.83.
9:41am: The Shanghai Composite Index opens a morning during 3,926.74 points, down 0.043 per cent, or 1.68 points on Monday’s close. The CSI300 index of Shanghai-Shenzhen vast tip bonds opens during 4,083.44, down 0.023 per cent or 0.93 points.
9:40am: The Hang Seng Index opens during 24,795.92, adult 1.12 per cent or 274.80 points. The China Enterprises Index (H-share index) opens during 11,481.59, adult by 1.68 per cent or 189.93 points.
9:35am: AXA Investment Managers’ Mark Tinker:
“We seem to be saying institutional investors give adult on ’old China’ plays such as line and EM (debt and equity), as 1, 3 and 5 year numbers demeanour intolerable compared to equities. Within equities they are also slicing bearing to commodity and EM unprotected stocks. It might be too early to be a contrarian as a offered could continue for some time yet, though gratefulness and fundamentals were favoring grown markets (DM) over EM bonds behind in 2010. It looks a small late now, positively for a prolonged tenure investor.
If we demeanour during association within markets, we notice that in Hong Kong during slightest correlations between bonds are tighten to an all-time high. This apparently reflects a tell of a China trade for a series of investors and a fact that Hong Kong is providing a liquidity for them to do so.
Such an indicator is customarily a vigilance for a brief tenure annulment – and positively a Hong Kong index appears to be tighten to a bottom here – which, should it persist, is not a healthy sign.
Another vigilance we are examination closely right now is a domain series in China given it is a required deleveraging trade that is underway in a mainland.
It is also value observant that according to China Securities Depositary and Clearing, a series of sell investors in Jul fell to 51 million, from 75 million a prior month, suggesting a serve rebate in movement investors.
The large story stays a constructional remodel and justification this week suggests it is still on track. The shade banking complement is a sign of a fact that China does not nonetheless have grown financial markets. Part of a response is to concede a shade banking resolution (for instance Alibaba and income marketplace funds) and afterwards ‘co-opt it’ into a executive system.”
For their updated draft on Shanghai, greatfully click next to enlarge.
9:23am: The People’s Bank of China sets a mid-price of onshore yuan trade during 6.2298, weaker by 1136 basement points to a US dollar from a final Monday mid-price fix.
9:20am: Societe Generale pronounced in a report:
“The barbarous pig cycle is heating adult again: pig prices in a CPI basket have risen 17.4 per cent since May and were adult 16.7 per cent yoy in July, that accounted for half of a title CPI reading of 1.6 per cent yoy.
The stream cycle is identical to a prior dual disruptive cycles in terms of supply shortages, though lacks a equally vicious support from a direct side.
Pork prices will substantially keep rising and pull CPI above 2 per cent yoy in a entrance months, though a possibility of CPI going most over 3 per cent is singular in a view.
Nevertheless, this acceleration opinion is still approaching to curb a executive bank’s range for process rate cuts, but, if a economy keeps struggling, we will still see other forms of financial process easing.”
9:20am: Hong Kong listed companies arising certain distinction outlooks given final closing: China Water Industry Group, China Weaving Materials Holdings, China Chengtong Development Group, China Energine International, Dream International and Century Legend Holdings – a latter from a detriment in a initial half of final year.
Profits are approaching to decrease for Century Ginwa Retail Holdings and Poly Property Group. Neway Group, Active Group and Shuanghua Holdings foresee waste – a latter dual from boost final year. Losses are approaching to boost for China Finance Investment Holdings, China Qinfa Group and Kuangchi Science.
9:10am: Shanghai Composite Index small altered during 3,928.42 during pre-open session, while a CSI 300 Index was also indicated prosaic during 4,084.37.
9:10am: Chia Tai Enterprises (CT Enterprise) announced a halt formula late Monday, display a 7.4 per cent decrease in income and 54.5 per cent dump in profits. Shares in a automobile tools and industrial machine organisation final traded during HK$4.95.
Wing Lee Property Investments also expelled halt results. Turnover was most prosaic during customarily underneath HK$14 billion, though distinction jumped from HK$23 million to HK$73 million as satisfactory value of investment properties increased. Wing Lee will open during HK$1.36.
9:01am: The Hang Seng Index futures mark Jul agreement rose 0.61 per cent or 149 points to 24,550 in the pre-opening session.
8:59am: Four Shanghai listed A-share companies practical to resume trade on Tuesday while 3 companies will postpone trade in their stock. The series of dangling companies in Shanghai is 90, representing 8.31 per cent of a total.
In Shenzhen, a sum of 13 listed companies contend they will resume trade on Tuesday, while dual firms will postpone trade in their shares. Some 294 firms in Shenzhen are in intentional suspension, accounting for about 17.38 per cent of sum listed companies.
8:22am: The volume of bad loans in China’s blurb banks rose by 11 per cent in a second entertain of a year, according to information expelled Monday on China Bank Regulatory Commission website.
8:15am: Jiangsu-based China Yurun Food, a mainland’s second largest beef product supplier, reported late on Monday a net detriment of 724.3 million yuan in a year’s initial 6 months, compared to a net distinction of 16.1 million in a year-earlier period, as it unsuccessful to pass on aloft sow prices and prolongation costs to customers. Gross distinction domain sank to 2.7 per cent from 7.4 per cent in a year-earlier period.
8:05am: Prudential PLC (orange), an general life word and financial services group, is going to announce a halt outcome today. It share cost has generally outperformed Hang Seng Index (purple) over a past 3 months, with brief durations of improvement between late May and early June. The association sealed during HK$182.7 on Monday, down 0.814 per cent from final Friday’s close.
8:01am: Semiconductor Manufacturing International Corporation (orange), a Shanghai-based semiconductor foundry company, will announce a halt outcome today. The association sealed during HK$0.72 on Monday, adult 4.348 per cent from final Friday’s close.
Its share cost outperformed Hang Seng Index (purple) in June, though subsequently took a dive in Jul due to a mainland batch marketplace rout, and has underperformed a index in new weeks. Click on draft next to enlarge.
7:58am: Beijing Capital Land, a skill growth and investment holding company, announced late Monday a net distinction fell by 24 per cent year-on-year to 0.5 billion yuan. The association reported a engaged sales in a initial half of 2015 reached 12.12 billion yuan, adult by 79 per cent year-on-year.
Beijing Capital sealed during HK$3.8 on Monday, down 0.262 per cent from a previous close.
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