2015-08-17 10:32:03
Chinese stocks slumped, with a gauge of shares in Hong Kong falling to an eight-month low, as foreigners pulled funds amid concern about the weaker outlook for the yuan and economic growth.
The Hang Seng China Enterprises Index slid 1.7 percent to 10,867.83 at 11:00 a.m., while the Shanghai Composite Index retreated 0.7 percent. Net outlows from Chinese and Hong Kong equities reached $531 million in the week to Aug. 12, the ninth week of sales out of the past 10, China International Capital Corp. said, citing EPFR Global. Ping An Insurance (Group) Co. led losses by insurers as the government seeks to contain the fallout from blasts in Tianjin port.
The yuan sank the most in 21 years last week after China allowed markets greater sway in setting the currency’s level. China’s industrial production, investment and retail data all trailed analysts’ estimates, according to data released this month. The securities regulator signaled on Friday China Securities Finance Corp. will reduce the scale of its intervention in the stock market. The fund has become one of the most influential investors since a $4 trillion rout.
“Investors expect the depreciation of the yuan to continue,” said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. in Hong Kong. A weaker currency would make Chinese assets less attractive to foreigners, he said, while any withdrawal by the government from the market would further “frighten” investors.
Yuan positions at China’s central bank and financial institutions fell by the most on record in July, a sign capital outflows picked up and the central bank stepped up intervention to support the yuan.
Tianjin Blast
Mainland-traded shares have diverged with their Hong Kong counterparts after unprecedented government intervention to stop a $4 trillion rout. While the Shanghai Composite climbed 13 percent from its July 8 through last week, the Hang Seng China Enterprises index has erased an advance of as much as 8.1 percent to trade at its lowest level since December 1.
Over the past 2 1/2 months, about $8.8 billion has flowed out of China/Hong Kong focused global funds, CICC said in a note Monday.
While China Securities Finance will remain in the stock market for years to come, it won’t normally step in unless there’s unusual volatility and systemic risks, the China Securities Regulatory Commission said in a statement on its website on Friday. The regulator said it will focus on letting the market self-adjust as volatility falls.
Insurers led declines in Hong Kong on Monday. The death toll from Wednesday’s blasts at a chemical warehouse in Tianjin climbed to 112, while 95 people are still missing, Xinhua New Agency reported, as the disaster’s effects rippled through the region’s businesses.