Jul 28, 2015

    China woes drag down Asian bourses

    ASIAN stocks took a battering yesterday, as a renewed savage selldown rocked the Chinese market.

    The Shanghai Stock Exchange Composite Index plunged 8.48 per cent - its biggest single-day fall in eight years - amid growing concerns over China's economic slowdown.

    Its Statistics Bureau yesterday turned in a disappointing 0.3 per cent drop in industrial corporate profits last month, after preliminary figures on Friday showed that China's manufacturing sector slumped to its lowest in 15 months in July.

    China's renewed equity slump is a blow to policymakers, who had taken a series of measures to stem a US$4-trillion (S$5.5-trillion) market rout that lasted for a month, ending in the middle of this month.

    "A rapid, post-rout rebound in mainland 'A' shares has ended and the market has entered a stage of fluctuations, with investor sentiment increasingly unsteady," said fund manager Yang Delong at China Southern Asset Management in a note.

    Equities elsewhere in the region were not spared either. Hong Kong fell 3.09 per cent and Japan dipped 0.95 per cent.

    At home, the Straits Times Index slid 1.17 per cent, or 39.23 points, to 3,313.42. Some 1.74 billion stocks worth $982 million were traded.

    The day's losses were led by blue-chip heavyweights such as the Singapore Exchange, which sank 32 cents to $8.21, as well as DBS Group, which dropped 32 cents to $21.08.

    This was even as the banking group posted a strong set of second-quarter earnings - a 15 per cent jump in net income to $1.12 billion - before the market opened.

    The stock's fall-off follows a gradual build-up over the last two weeks.

    A Nomura report noted that the group's performance was "ahead of market and (its) estimates".

    "Investors will be pleased to know that despite the economic challenges in the region, there was no deterioration in asset quality," it said, maintaining a "buy" rating on the stock.

    Commodities giant Noble Group lost 1.5 cents to 62 cents amid a global commodity rout. It announced a $11.3-million share buy-back in the morning.

    Agri-business group Olam International was among the day's few gainers, climbing one cent to $1.79.

    The most actively traded stock was Catalist-listed waterproofing firm Chinese Global, with 178.2 million shares changing hands. Its shares soared 4.3 cents to 6.3 cents.

    On the whole, global equities ended last week on a weaker note, said IG market strategist Bernard Aw.

    This was given the persistent sales of commodities and speculation ahead of the United States Federal Open Market Committee meeting to take place later this week, which could offer more direction on the interest rate hike.

    Risk sentiment dented investor confidence on Wall Street on Friday, as the Dow Jones Industrial Index slipped 0.92 per cent.