Chinese and Hong Kong stocks fall as yuan devaluation fears linger
Published 19/08/2015 | 02:30
Shares in China and Hong Kong fell yesterday as the yuan eased against the dollar, reigniting fears that Beijing may be intent on a deeper devaluation of the currency despite the central bank's comments that it sees no reason for a further slide.
The CSI300 index fell 1pc by the end of the morning session, while the Shanghai Composite Index lost 1.5pc.
"Anticipation of further devaluation discouraged investors from holding yuan-denominated assets," said Alex Wong, a director at Ample Finance Group in Hong Kong.
"We see no positive catalyst that can boost the market in the medium run. Investors are not keen to enter the market when they see very limited upside potential," Mr Wong added.
China CSI300 stock index futures for August fell 0.6pc.
The yuan fell against the dollar yesterday despite a slightly stronger midpoint set by the central bank, and traders expect the currency to remain under downward pressure as the economy struggles.
The People's Bank of China devalued the currency last week by nearly 2pc, triggering an avalanche of selling by investors who feared Beijing wanted to engineer a much sharper decline to support weak exports.
The PBOC was later forced to step into the market and tell state banks to support the currency. Shares of importers and firms with high US dollar-denominated debt have been under pressure along with Chinese airlines who face higher fuel bills following the devaluation.
Among airlines, China Eastern fell 3.9pc and China Southern also tumbled.
Chinese investors lowered expectations for further monetary stimulus after data Tuesday showed home-price gains are spreading. (Reuters)