FRANCE: Asian shares opened lower on Monday amid continuing concerns about the health of China’s economy, and U.S. Federal Reserve Vice Chairman Stanley Fischer’s remarks the Fed had not ruled out an interest rate rise in September. In Tokyo the Nikkei fell by slightly more than 1 percent in morning trading, following news Japanese industrial output had fallen beyond expectations, by 0.6 percent in July. In South Korea, the KOSPI was down almost 0.5 percent, as was Singapore’s Straits Times Index. Australia’s ASX 200, meanwhile, was down nearly 1.2 percent by lunch, local time.
Chinese stocks also opened sharply lower. After recovering more than 10 percent Thursday and Friday — following a dramatic 18 point fall in the first half of last week — the main Shanghai Composite Index was trading 3 percent lower by late morning. The secondary index in Shenzhen was down 2.7 percent while the more volatile ChiNext index, for high-tech stocks, which had risen by more than 6 percent Friday, was down 3.8 percent.
Hong Kong’s Hang Seng, which had falled more than 1 percent Friday, also opened lower, falling almost 0.7 percent by late morning.
Both Shanghai and Hong Kong are facing one of their worst monthly declines for August — at the start of Monday’s trading both were down some 12 percent on the start of the month.
The falls on China’s markets again raise questions about the success of the Chinese government’s attempts to calm investor sentiment. The markets had jumped Friday on news China’s state pension fund would invest more than $300 billion in shares in the near future. And at the weekend the government removed a cap on commercial banks’ loan to deposit ratios — previously set at 75 percent of deposits — to encourage lending to businesses, reduce the prevalence of shadow banking and boost the real economy.
That move followed remarks by Chinese Premier Li Keqiang, who told a meeting of China’s top leadership the Chinese yuan would remain “basically stable” following its devaluation of around 2 percent earlier in the month. Li was quoted by state media as saying there was no basis for continued depreciation of the yuan, the economy was generally sound, and China would pursue a “proactive fiscal policy and prudent monetary policy.” The official Global Times newspaper said Monday Li’s comments “should help restore investor confidence.”
