Investors look at computer screens showing stock information at a brokerage house in Shanghai. Shares ended up 0.3% at 3,445.40 points yesterday.

AFP
Tokyo


China’s stock markets were hit by another wave of volatility yesterday after suffering their heaviest losses since the summer rout, while most other Asian markets started an eventful week on the defensive.
In Tokyo, the Nikkei 225 down 0.7% at 19,747.47 points; Shanghai composite up 0.3% at 3,445.40 points; Hong Kong fell 0.3% at 21,996.42 points and Sydney S&P/ASX 200 down 0.7% at 5,166.50 points yesterday.
Chinese dealers were buoyed by hopes the International Monetary Fund will agree to a proposal from its executive board to include the Chinese yuan in its special drawing right (SDR) basket of elite currencies.
But they remain on edge after Friday’s collapse, which was fuelled by news that China’s biggest brokerages were being probed over suspected “rule violations” in the wake of the multi-trillion dollar stock market plunges.
Agreement over the yuan’s inclusion, which is widely expected, would realise a long-held goal for Beijing of giving its unit international status, alongside the dollar, euro, pound and yen.
Inclusion would lead to mainland stocks becoming more accessible to foreigners, Hao Hong, Hong Kong-based equity strategist at Bocom International Holdings, wrote in a note yesterday. The yuan reversed morning losses to sit slightly higher against the dollar in late trade.
Shanghai dived 5.5% and Shenzhen more than 6% Friday after brokerage giant Citi and Guosen said they were being investigated by officials, while Haitong halted trading in its shares.
The losses were exacerbated by worse-than-expected profits for Chinese industrial giants and worries over the start of initial public offerings (IPOs) this week.
The drop rekindled painful memories of the sharp sell-off between June and August that saw Shanghai slump 40% and trillions wiped off valuations. Shares have since recovered about 25%.
Brokerage equities plunged in Shanghai Monday again. Haitong slumped almost 9% as trading resumed while Citic lost 1.5%, extending Friday’s losses.
“The brokerage sector is likely to continue to experience some pressure,” Gerry Alfonso, a sales trader at Shenwan Hongyuan Group in Shanghai, told Bloomberg News.
“Given the volatile environment, investors are likely to stay away from sectors that might be impacted by the manufacturing figure.” However, Shanghai and Shenzhen’s benchmark index ended the day slightly higher, having swung between positive and negative all day, while Hong Kong was 0.3% lower.
But Tokyo fell along with Sydney, while Seoul sank 1.8%. “Concerns over slowing growth in China and some parts of global economy still persist and may last through the first half of 2016,” said Agus Yanuar, President Director at PT Samuel Aset Manajemen in Jakarta.
Investors are keeping tabs on the release of a string of figures and meetings this week that could have market-moving effects across the globe.
Among the key events are the release of manufacturing data from major economies, a European Central Bank policy meeting that could see further monetary easing and a US jobs report at the end of the week.
Federal Reserve chair Janet Yellen is also due to appear before Congress, with markets hoping for more guidance ahead of the central bank’s expected interest rate cut next month. The Opec is also due to start a crucial meeting to discuss output at the end of the week.
“After last week’s doldrums, this week’s agenda will come as a shock to the system,” Raiko Shareef, a markets strategist in Wellington at Bank of New Zealand said in a client note.