Having been outperformed by their larger peers earlier in the session, small-cap stocks roared higher in afternoon trade, with the CSI 500, Shenzhen Composite, and tech-heavy ChiNext indices all finishing with gains in excess of 2%.
Shanghai stocks closed up 1.23 percent on Wednesday, erasing a more than five percent plunge in morning trade on expectations of fresh government support for the market. Neither EconoTimes nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.
U.S. stocks followed world markets lower Tuesday after China’s main index suffered its biggest tumble since late July.
Investors say China’s stock markets – which were never for the faint of heart – have become dysfunctional since the government’s massive and unprecedented rescue effort.
The mainland’s benchmark Shanghai Composite was 1.5% down to 3,735.92 points.
The spectre of a slowdown in China’s economic growth and a US interest rate hike have hit asset markets in emerging economies hardest. Japan’s Nikkei 225 slipped 1.6 per cent to 20,222.63 and South Korea’s Kospi fell 0.9 per cent to 1,939.38. However, they later recovered their losses due to hopes the government in Beijing would step in to prop up the market, traders said. Yuan positions at China’s central bank and financial institutions fell by the most on record last month, a sign that investors are moving money out of the country.
Korean exporters were expected to suffer double trouble from the yuan’s weakness, which could slow demand in the world’s second-largest economy and hurt their export competitiveness in their respective industries.
Meanwhile, China’s yuan fell 0.05% to 6.3924 per US dollar after the global Monetary Fund said the currency would not be added to its Special Drawing Rights this year.
Awaiting word from the Fed Wall Street was trading lower yesterday, with the Dow Jones Industrial Average down 1.25 per cent at 17,291.67 points in deals around noon.
“Only the “national team”… would be able to turn the tide like this”, said Yingda Securities analyst Li Daxiao, referring to entities acting for the government.
Shares of importers and firms with high U.S. dollar-denominated debt have been under pressure following last week’s yuan devaluation.
US crude futures were down 0.6% at $42.38 a barrel, edging back towards a six-and-a-half-year low of $41.35 struck on Friday.
US policymakers had said at their meeting in July that they need to see further improvement in the labour market and inflation rate before raising interest rates for the first time in almost nine years, the Fed minutes showed on Wednesday. Brent crude, a benchmark for global oils used by many U.S. refineries, fell 28 cents to $46.88 a barrel.