China stocks drop as yuan falls further; airlines, property in the crosshairs

China’s yuan hit a four-year low on Wednesday, falling for a second day after authorities devalued it on Tuesday.

The People’s Bank of China described the near two per cent devaluation early in the day as a “one-off”, based on a new way of managing the exchange rate that better reflected market forces, but analysts wonder if just the beginning of a longer slide in the yuan’s value.

The 1.86 percent cut-the largest since the yuan was unpegged from the greenback in 2005-comes as speculation mounts China is preparing to widen its currency trading band for the first time since March 2014. The Company operates domestic airlines, airlines among Hong Kong, Macau and Taiwan, as well as worldwide airlines.

China’s industrial production expanded less than analysts estimated, weakening the outlook for the world’s second biggest economy and putting additional downward pressure on an already weakening currency.

China’s moves sparked fears of an Asian currency war and damped bets the Federal Reserve will raise interest rates in September. And a sales contract and related invoice issued by China Fiber showed the firm sold patch cords at an eighth of the price it claimed. South Korea’s Kospi index lost 1.3%.

The Dow tumbled 212.33 points or 1.2 percent to 17,402.84, while the NASDAQ plummeted 65.01 points or 1.3 percent to 5,036.79 and the S&P 500 fell 20.11 points or 1 percent to 2,084.07.

The Bloomberg Commodity Index that tracks 22 raw materials had its biggest gain since February on Monday amid increased Chinese crude-oil imports, supply disruptions at copper mines and worsening crop conditions for corn.

The CSI 300 and SSE 50, indices comprising large-cap stocks, are lower by 0.48% and 0.97% respectively.

But Shanghai had added 0.83 percent in mid-afternoon trade while Hong Kong was up 0.71 percent.

In Hong Kong, the Hang Seng index failed to pick up on the mainland’s optimism and closed down 0.1% at 24,521.12. The underlying measure sank 1% on Tuesday.