Chinese stocks fell hard

• David Scutt, Business Insider Australia
 

• 8h
• 5,286

Getty Images

See Also

The weekend is over, and the markets are falling again

Here's your complete preview of this week's big market-moving events

Goldman Sachs rethinks its stock market outlook because of something that hasn't happened in at least 48 years

Chinese stocks have set a poor tone for the start of another trading week, with a sell-off in stocks gathering pace into the close of trade.

The benchmark Shanghai Composite finished the day down 5.3%, having been down only about 3% for most of Monday’s session.

The CSI 300, a combination of the 300 biggest companies on the Shanghai and Shenzen markets, was also down just over 5% for the day.

Its broader related index, the CSI 500, was down 6.7%. If the circuit-breaker rules designed to contain market panic had not been ditched last week by Beijing authorities, trade would have been at least temporarily halted on Monday's sell-offs.

The falls came after China's central bank, the People's Bank of China, surprised markets by announcing a yuan fixing that was stronger than expected, setting the dollar-yuan rate at 6.5626.

The figure was below Friday's fixing of 6.5636 and the final traded price of 6.5938 seen Friday evening.

A lower number indicates that the yuan has strengthened against the US dollar.

In initial trades the fixing rose to as high as Friday's closing level before reversing sharply, indicating that the government — through its network of state-owned banks — may be intervening in the market to support the currency.

The daily chart of the dollar versus the CNH — offshore traded yuan — reveals how the recent sell-off in the currency has stalled in recent sessions.

.

Here's the Asia market scoreboard after the China close. Note that Japanese markets were closed for the Coming of Age holiday.

Stocks

Stocks

• ASX 200 4932.24 , -58.60 , -1.17%
• Nikkei 225 17697.96 , -69.38 , -0.39%
• Shanghai Composite 3018.00 , -168.42 , -5.29%
• Hang Seng 19983.39 , -470.32 , -2.30%
• KOSPI 1894.84 , -22.78 , -1.19%
• Straits Times 2696.52 , -54.71 , -1.99%
• S&P 500 Futures 1909.00 , -2.50 , -0.13%

Forex

• USD/JPY 117.19 , -0.25 , -0.21%
• USD/CNY 6.5832 , -0.0100 , -0.15%
• AUD/USD 0.6973 , 0.0022 , 0.32%
• NZD/USD 0.6538 , 0.0000 , 0.00%
• AUD/JPY 81.72 , 0.11 , 0.13%
• EUR/USD 1.0912 , -0.0017 , -0.16%
• GBP/USD 1.4530 , 0.0013 , 0.09%
• USD INDEX 98.410 , -0.1300 , -0.13%

Commodities

• Gold $1,105.20 , $1.36 , 0.12%
• Silver $13.99 , $0.06 , 0.41%
• WTI Futures $32.36 , -$0.80 , -2.41%
• Copper Futures ¥35,010 , -¥930 -2.59%
• Iron Ore Futures ¥305.50 , -¥8.00 , -2.55%

10-Year Bond Yields

• Australia 2.761%
• New Zealand 3.390%
• Japan 0.222%
• Germany 0.521%
• UK 1.763%
• US 2.116%

Read the original article on Business Insider Australia. Copyright 2016.

NOW WATCH: Why Chinese executives keep disappearing

More: China Markets and Economy BI Australia China

China: Stocks fall 2% on deflation worries, shrug off firmer yuan

PHOTO: EPA

JAN 11, 201612:54 PM

[SHANGHAI] China stocks fell more than 2 per cent on Monday, shrugging off a firmer yuan, as data pointed to growing deflationary risks in the world's second-largest economy.

The CSI300 index fell 2.2 per cent to 3,288.80 points at the end of the morning session, while the Shanghai Composite Index lost 2.4 per cent to 3,109.95.

China CSI300 stock index futures for January fell 2.4 per cent, to 3,256, 32.80 points below the current value of the underlying index, suggesting investors see further losses. "The market is still a bit unstable," said Xiao Shijun, an analyst at Guodu Securities in Beijing. "Following the big move in the yuan last week, most A-shares are still under a fair amount of pressure." China's central bank allowed the yuan to weaken by over 1.5 per cent against the dollar in the first week of 2016, its biggest currency move since mid August when a devaluation rattled world markets.

The yuan strengthened marginally against the dollar on Monday after the central bank said a firmer midpoint reference rate for the second session in a row.

Some traders believed the stronger official setting may signal the latest jolt of depreciation is over for now, though others said downward pressure on the currency will persist as the economy continues to slow.

December inflation data on the weekend added to investors'concerns.

China's consumer inflation barely edged up in December while companies' factory-gate prices continued to fall, adding to concerns about growing deflation risks.

In Hong Kong, the Hang Seng index dropped 2.5 per cent to 19,952.63 points, while the Hong Kong China Enterprises Index lost 3.5 per cent, to 8,539.73.

The index measuring price differences between dual-listed companies in Shanghai and Hong Kong stood at 143.47.

A value above 100 indicates Shanghai shares are pricing at a premium to shares in the same company trading in Hong Kong, and vice versa.

The northbound quota for the Hong Kong-Shanghai Stock Connect, currently set at 13 billion yuan, saw net outflows of 0.25 billion yuan.

Total volume of A shares traded in Shanghai was 14.62 billion shares, while Shenzhen volume was 14.58 billion shares.

Total trading volume of companies included in the HSI index was 1.0 billion shares.

REUTERS

    
 

Hong Kong offshore yuan interbank rate hits record highs

      

Hong Kong Interbank Offered Rates (HIBOR) all hit record highs on Monday, led by the overnight rate which spiked to over 13 per cent from 4 per cent Friday, as investors bailed out of offshore yuan for dollars. 

PHOTO: REUTERS

JAN 11, 20161:44 PM

[SHANGHAI] Hong Kong Interbank Offered Rates (HIBOR) all hit record highs on Monday, led by the overnight rate which spiked to over 13 per cent from 4 per cent Friday, as investors bailed out of offshore yuan for dollars.

All HIBOR tenors have been rising recently given that the onshore yuan has slid over 6 per cent since August, with overseas investors worried that Beijing is preparing for a far deeper devaluation in the yuan.

That has caused the offshore market to price the offshore currency at a deep discount to the onshore version .

In addition to the overnight rate rising sharply, all other offshore tenors are at similar record highs, ranging from 11 per cent for the one-week HIBOR to 5.2 per cent for the one-year tenor.

All are far higher than the onshore rates quoted in Shanghai (SHIBOR), where the overnight rate, while up from previously, is still pricing at less than 2 per cent.

REUTERS

      

US troops put on highest alert for any North Korea provocation

PHOTO: EPA

JAN 11, 20161:37 PM

[SEOUL] US forces in South Korea were put on their highest level of alert on Monday in case of any provocation from North Korea, following North Korea's nuclear test last week Curtis Scaparrotti, Commander, UN Command/Combined Forces Command/United States Forces Korea (USFK), made the order during a visit to the Osan Air Base, operated jointly by the United States and South Korea, a USFK official said.

REUTERS

    
 

China says to impose quota limit on local government debt

JAN 11, 20161:02 PM

[BEIJING] China will cap the amount of debt local governments can issue and adjust the quota based on economic performance, the finance ministry said on Monday.

China will appropriately expand local government quotas if there is increasing downward pressure in the economy while cutting down the quota when the economy improves, the ministry said in a statement on its website.

China will also comprehensively evaluate the risks of local government debt and give early warnings to local governments who have high debt burdens.

China has been struggling to control the growth of its massive local government debt pile, officially estimated at 15.4 trillion yuan (US$2.34 trillion) in 2014, without hamstringing the ability of municipalities to invest and support growth.

In March, the ministry announced a 1 trillion yuan debt swap programme to help municipal governments refinance high-interest, largely off balance sheet maturing debt with lower interest debt issued in the new municipal bond market. The size of the programme was later expanded to 3.2 trillion yuan.

REUTERS

      

Oil prices slip further on China worries

Oil prices fell further on Monday on persistent worries about China's growth slowdown and a supply glut, but analysts said tensions between producer giants Iran and Saudi Arabia could provide some support.

PHOTO: AFP

JAN 11, 20162:28 PM

[SINGAPORE] Oil prices fell further on Monday on persistent worries about China's growth slowdown and a supply glut, but analysts said tensions between producer giants Iran and Saudi Arabia could provide some support.

US benchmark West Texas Intermediate for February delivery was down 65 cents at US$32.51 by 0600 GMT, while Brent was down 75 cents at US$32.80.

Both contracts slid about 10 per cent last week to 12-year lows as global markets were hammered by concerns about China, the world's biggest energy consumer, which overshadowed a strong US jobs report.

"Sentiment indicators are all to the extreme sell," Michael McCarthy, a chief strategist at CMC Markets in Sydney, told Bloomberg News.

"Until we see a supply-side response, the potential for significantly higher prices is low." Sanjeev Gupta, head of the Asia-Pacific Oil and Gas practice at professional services organisation EY in Singapore, said: "Rising tensions between Saudi Arabia and Iran could support the upswing of oil prices in the short term." But he added that oil markets would be closely tracking new economic data from Europe and China, and "further signs of a slowdown will put further downward pressure on the price of crude".

On Sunday, top Arab diplomats rallied behind Saudi Arabia in a dispute with Iran that has threatened to derail efforts to resolve Middle East conflicts including the war in Syria.

The row between the two major oil producers erupted on January 2 after Saudi Arabia executed a prominent Shi'ite cleric along with 46 others on terrorism charges.

AFP

    
 

Where are workers earning the most? - By Joe Myers Jan 5 2016

• GLOBAL
• REGIONAL
• INDUSTRY

Economics

Employment, Skills and Human Capital

Where are workers earning the most?

By Joe Myers

Jan 5 2016

• 612Share on Facebook (Opens in new window)612
• Click to share on Twitter (Opens in new window)
• 695Click to share on LinkedIn (Opens in new window)695

The USA may be famous for doing things bigger, but it can no longer claim to outdo the rest of the world when it comes to wages. As of 2014, the USA’s average pay packet has been overtaken by that of the small European nation of Luxembourg.

Research by the OECD has calculated the average wage among member nations, with 2014 the most recent data year. The research highlights significant differences within the organisation – over $45,000 separates those at the top and those at the bottom.

The following chart shows the top 10 nations with the highest average wage. Shown in US dollars, the data is adjusted for 2012 USD purchasing power parities.

With an average wage of over $60,000, Luxembourg has surged ahead of the United States. The US takes second place, with an average of $57,139. Switzerland comes just behind in third place, also returning an average in excess of £57,000.

The top 10 is dominated by northern European nations from Norway and Ireland, to the Netherlands, Denmark and Belgium. Canada and Australia complete the chart.

Across the OECD there has been a slight rise in average wages from the previous year. However, several nations in the top 10 saw their average wage decline from 2013 to 2014. Australia, the Netherlands and Belgium all experienced slight declines.

Luxembourg’s place at the top of the chart is in part a result of a high minimum wage– in 2013 it was the highest in the OECD. Additional OECD data shows that teachers in Luxembourg are the highest rewarded in the world, while a strong finance and banking sector and significant foreign investment has brought capital into the country.

Have you read?The Global Gender Gap Report 2015Where do teachers earn the most?Which European countries have the biggest gender pay gaps?

To keep up with the Agenda subscribe to our weekly newsletter.

Author: Joe Myers is a Digital Content Producer at Formative Content. 

Image: A man using his mobile phone stands near a glass window at a building at a Tokyo’s business district, March 2015. REUTERS/Yuya Shino 

Posted by Joe Myers - 17:16

All opinions expressed are those of the author. The World Economic Forum Blog is an independent and neutral platform dedicated to generating debate around the key topics that shape global, regional and industry agendas.