China stocks slumped as trading resumed after a week-long holiday which saw global equities enter a bear market on concern over the strength of the world economy.
The Shanghai Composite Index dropped 2.4 percent to 2,698.16 as of 9:47 a.m. local time, led by financial and industrial companies. The MSCI All-Country World Index retreated 2.6 percent since the city’s markets closed on Feb. 5, while the Hang Seng China Enterprises Index tumbled 6.8 percent. The yuan gained 0.9 percent in Shanghai, the biggest advance since at least 2007, after the central bank strengthened the currency’s reference rate by the most in three months.
China’s benchmark stock index has plunged 22 percent this year on concern that the economic slowdown and weakening yuan will exacerbate capital outflows. The nation’s foreign-exchange reserves shrank in January to the smallest since 2012, data released on Feb. 7 showed. Margin traders have also been unwinding bullish bets on stocks amid speculation valuations are still too high.
Trade data as well as new loan figures for January are due Monday. Exports probably declined for the seventh straight month, according to the median estimate in a Bloomberg survey. China is targeting its economy to expand in the range of 6.5 percent to 7 percent for this year, after recording 6.9 percent growth in 2015 that was the slowest in 25 years.
The Hang Seng China gauge rallied 2.8 percent after slumping to a six-year low last week. The Hang Seng Index added 2.1 percent.
Source : Bloomberg