China stocks slid in late afternoon trade, sentiment still fragile

In yuan terms, China’s exports rose at an annual rate of 2.3 per cent in December, defying expectations of a double-digit decline for the month.

In Shenzhen, Hebei Steel, down 2.2 percent to 3.54 yuan; Myhome, down 5.8 percent to 5.35 yuan and BOE Technology, up 0.4 percent to 2.76 yuan were among the most actively traded. The Hang Seng Index HSI, -1.38% was off by 1% and South Korea’s Kospi SEU, -1.11% was off 1.1%. The government’s policy to keep the yuan weaker has increased exports, signaling growth in external demand.

The country’s trade surplus widened in December to 元382.05bn yuan ($58.1bn) from 元343.1bn yuan in November. Many analysts are now fearing that China may be heading for a recession. Exports slid 1.4 per cent in December, following a 6.8 per cent drop in November.

In December, banks’ new lending reached 597.8 billion yuan, down 345.3 billion yuan from December 2014 and lower than the expected 700 billion yuan, said the central bank.

Indeed, investors ignored fresh market-soothing comments from regulators. “Policymakers are embracing a more flexible” foreign exchange regime, making “high volatility” the theme for the yuan in 2016, the bank said in a recent report. The Yuan has long shadowed the US Dollar which rose significantly against other major currencies a year ago, taking the Chinese currency with it. The hike in the relative value of the Yuan was enough to persuade the International Monetary Fund that it was no longer (so) undervalued, but this analysis overlooked the Yuan-Dollar pair.

China’s central bank held the line on its yuan for a fourth straight session on Wednesday while putting the squeeze on offshore sellers of the currency, calming fears of a sustained depreciation – at least for now. The onshore yuan can trade up or down within 2 per cent of the bank’s daily guidance.

Meanwhile, trade with emerging markets including India and ASEAN were better in overall performance in 2015, Huang said, adding that trade with India increased 2.5 percent year on year. The Dow Jones industrial average gained 117.65 points, or 0.7 per cent, to 16,516.22. USA stocks rose Tuesday as investors bought shares of consumer, technology and health-care companies, even as the energy sector slipped.

Gold prices were flat at $US1,084.70 a troy ounce. The kiwi fell to 06485 down by 30 points as the stress over falling oil prices weighed on the commodity linked currencies.