China Stock Market Turns Bearish, Other Asian Stocks Track Decline

The Shanghai index dived 3.55 percent to close at 2,900.97 points. The contract rose 72 cents, or 2.4 percent, to close at $31.20 a barrel on Thursday.

Hong Kong’s Hang Seng index and Japan’s Nikkei 225 also finished lower, falling 1.50% and 0.54% respectively.

Throughout the region, stock benchmarks were down slightly, as investors remained nervous following a sharp early-year selloff.

The People’s Bank of China has also been trying to guide the yuan lower, a strategy that some analysts see as an effort to boost Chinese exports to support weakening economic growth there. B-shares are shares denominated in foreign currency, such as in U.S. dollars on the Shanghai Stock Exchange and Hong Kong dollars on the Shenzhen Stock Exchange.

Upbeat economic figures earlier in the week on trade and investment had tempered some of the fears about the slowdown in the world’s second-largest economy, but Friday brought news that fresh lending by Chinese banks was weaker than expected in December and well down on the previous month.

After two weeks of selling that drove the Shanghai index down 18 per cent, investors said they would look for answers at a routine weekly briefing by China’s stock regulator to be held later Friday.

Data from the nation’s central bank showed earlier Friday that Chinese banks issued 597.8 billion yuan ($US90.7 billion) of new yuan loans in December, down from 708.9 billion yuan in November and below the 700 billion yuan forecast made by economists polled by The Wall Street Journal.

ENERGY: U.S. crude oil rose 36 cents, or 1.2 percent, to $30.80 a barrel in electronic trading on the New York Mercantile Exchange.

The energy sector in Australia gave up most of its early morning gains, with the S&P/ASX 200 roughly flat.

“The crowd is still keen to pounce on Shanghai’s great fall, and as such the final stage of market revulsion is yet to come”, said Hong Hao, managing director at BOCOM International.

The midpoint for the tightly managed currency CNY=SAEC was set at 6.5637 per dollar on Friday, weaker than the previous fix of 6.5616 but 253 pips stronger than Thursday’s closing quote 6.5890.

Offshore the yuan was jolted weaker, and about 1.1 percent below the onshore spot at 6.6617 per dollar, buffeted by strong dollar demand, and persistent expectations that the yuan would weaken going forward, traders said.

CHINA TURMOIL: After a tumultuous start to the year for Chinese stocks and the yuan, both those markets showed tentative stability as the government moved to control fluctuations in the yuan. 85 to one U.S. dollar.

CURRENCIES: The euro rose to $1.0890 from $1.0859, while the dollar fell to 117.60 yen from 118.20 yen.

Gold prices were up 0.4% to $1078 a troy ounce.