Stock Market News Today 2018/08/13
Shanghai stocks drop as exchange clamps down on suspensions.
Stocks in Shanghai started the week on the back foot as China’s currency weakened and after the city’s stock exchange announced a drive to clamp down on strategically timed trading halts by listed companies.
The Shanghai Composite index was down 1.5 per cent in morning trading as the renminbi weakened 0.5 per cent to Rmb6.885 per dollar.
The fall came after the Shanghai Stock Exchange on Friday announced the clampdown on trading halts by companies listed on the bourse.
The evening announcement on the exchange’s official WeChat account stressed it would work to minimise unnecessary suspensions and called for the “de-functionalization” of trading halts, a reference to ending the practice of using suspensions to minimise price falls.
The Shenzhen Stock Exchange announced earlier in August that it had resolved to curb the phenomena of “arbitrary suspension”, “random suspension” and “long-term suspension”.
At close of market on Aug 10, companies suspended from trading in both Shanghai and Shenzhen totalled 121, among which 88 were suspended due to potential major asset restructuring, 24 due to major events and 6 pending unannounced major events.
Australia’s BlueScope Steel examining $700m US investment.
BlueScope Steel said on Monday it is evaluating a $500 to $700m investment its North Star business in Ohio, in the latest sign of how US-based steel producers are expanding to meet rising domestic demand as tariffs make foreign imports more expensive.
Australia’s biggest steel maker said it had initiated a comprehensive study to examine adding 600,000 to 900,000 metric tonnes per year of steelmaking capacity, on top of its existing production of 2.1m tonnes per year. The project would involve the addition of a third electric arc furnace and a second slab caster. A decision is expected at the company’s February 2019 annual results, it said.
“We believe the project may deliver BlueScope compelling through-cycle economics, and the study will seek to confirm that,” said Mark Vassella, Bluescope chief executive.
“Our financial principles will continue to govern our decision making around this.”
BlueScope said the expansion of capacity at its Ohio North Star business would take 2-3 years to complete, if it is approved. The proposed expansion comes as the company reported net profit after tax more than doubled to A$1.56bn in 2018 – its best financial performance since 2005.
Australian steelmakers have been exempted from tariffs imposed by the administration of US President Donald Trump, which aim to shield US steelmakers from foreign competitors.
Chinese stocks, currency fall as Turkey fears drive risk-off mood.
China-focused stocks dropped and the renminbi moved lower, in line with broader market moves on Monday, as investors showed caution amid Turkey’s worsening economic crisis.
The CSI 300 index of major Shanghai and Shenzhen stocks dropped 1 per cent, and in Hong Kong, the Hang Seng China Enterprises index was off 1.5 per cent. The broader Hang Seng index was down 1.4 per cent with all market segments in negative territory, following a similar fall in Tokyo.
The onshore renminbi exchange rate, which moves within a trading band of 2 per cent either side of a daily mid point set by the People’s Bank of China, fell 0.4 per cent to Rmb6.8757. The offshore rate was down 0.3 per cent at Rmb6.8871.
The moves came as the Turkish lira continued to slide in spite of a promise by the country’s finance minister that a plan to calm the markets will be unveiled on Monday morning. That pledge came hours after President Recep Tayyip Erdogan railed against high interest rates and described the plunge in the country’s currency as a foreign “operation”.
The lira was down 8.7 per cent at TL6.9871 against the dollar having earlier broken through the TL7 mark to hit an all-time low of TL7.2149.
Global Stock Market Overview.
Equities and currencies moved lower while haven assets were in demand across Asia Pacific as fallout from Turkey’s currency crisis rippled through markets.
The moves came as the Turkish lira continued to slide in spite of a promise by the country’s finance minister that a plan to calm the markets would be unveiled on Monday morning. That pledge came hours after President Recep Tayyip Erdogan railed against high interest rates and described the plunge in the country’s currency as a foreign “operation”.
The lira was down 5.7 per cent at 6.7896 against the US dollar, having earlier weakened beyond 7 to hit an all-time low of 7.2149.
Hot topic. The latest bout of lira selling — which took the year-to-date loss for the currency to more than 44 per cent — came after Mr Erdogan said the financial “storm” had been caused by “an operation against Turkey”.
Investors had hoped Turkey would detail a plan to deal with the growing crisis, potentially including interest rate rises and other measures to staunch rapid inflation and growing economic imbalances.
Late on Sunday, Turkish finance minister Berat Albayrak was quoted in the Hurriyet newspaper as saying: “From Monday morning, our institutions will take the necessary actions with the aim of calming the markets and will share the necessary announcements with the markets.” However, he did not specify what measures would be taken.
Forex and fixed income. The South African rand touched a two-year low against the dollar as concerns over the Turkish lira’s stability spread into other emerging market currencies.
The rand fell as much as 10.4 per cent to 15.5517 per dollar, the lowest level since June 2016, before pulling back to be down 3.3 per cent in morning trading in Hong Kong.
In China, the onshore renminbi exchange rate, which moves within a trading band of 2 per cent either side of a daily mid point set by the People’s Bank of China, fell 0.4 per cent to Rmb6.8728 per dollar. The offshore rate was down 0.3 per cent at Rmb6.8858 per dollar.
The Australian dollar was 0.3 per cent weaker at $0.7280 against its US counterpart while the UK pound and the euro, usually thinly traded in the Asia morning session, did not escape unscathed. The euro was off 0.2 per cent at $1.1382 while sterling was down 0.1 per cent at $1.2758.
The Japanese yen, typically a haven during market uncertainty, was 0.7 per cent stronger at ¥110.19 against the dollar and at its highest point in more than six weeks. The US dollar index, measuring the greenback against a basket of peers, rose 0.1 per cent to 96.413.
Equities. Asia’s main equity benchmarks were in negative territory.
The Topix in Tokyo was down 2.1 per cent and Hong Kong’s broader Hang Seng index slid 1.9 per cent with all segments in both markets declining. The S&P/ASX 200 in Sydney was off 0.4 per cent with the key basic materials and financials sectors dropping 1.3 per cent and 0.6 per cent, respectively.
China-focused stocks fell, with the CSI 300 index of major Shanghai- and Shenzhen-listed stocks dropping 1.9 per cent while in Hong Kong, the Hang Seng China Enterprises index was off 2.1 per cent. Further weighing on Chinese stocks, the Shanghai stock exchange on Friday announced the clampdown on trading halts by companies listed on the bourse.
Commodities. Brent crude was down 0.2 per cent at $72.65 a barrel while West Texas Intermediate was off 0.1 per cent at $67.59.
The price of gold was down 0.3 per cent at $1,207 an ounce.