BEIJING: Asian shares tumbled to a one-and-a-half-year year low on Wednesday and the safe-haven yen rallied as Chinese stocks struggled to pull out of a tailspin, shaking investors already rattled by Greece’s debt crisis.
But European bourses were expected to gain as Greek tensions eased for now. Eurozone members gave Athens until the end of this week to propose reform measures in order to secure the funding it needs to stay in the eurozone.
Financial spreadbetters predicted Britain’s FTSE 100 would open up 0.7 per cent, Germany’s DAX was seen gaining 1.3 per cent, and France’s CAC 40 was expected to rise 1.5 percent.
The drop in China extended a savage correction that has clipped 30 percent off Chinese shares since mid-June, threatening a new blow to the country’s already slowing economy despite a slew of market support steps from Beijing.
MSCI’s broadest index of Asia-Pacific shares outside Japan wallowed at its lowest level since February 2014, extending its early losses after Chinese shares opened sharply lower. It was last down 2.7 percent.
Japan’s Nikkei stock index ended down 3.1 percent, roiled by both China’s dent to regional sentiment and the stronger Japanese currency. “Today is all about China, with Greece in the background now that it’s been given a new deadline,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank in Tokyo.
“Shanghai’s early losses were like a cliff-dive, which had a huge impact on investor sentiment.” Shanghai’s benchmark composite index was off its session lows but still down 5.1 percent, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen slipped 6 percent.
Over 500 China-listed firms announced trading halts on the Shanghai and Shenzhen Exchange on Wednesday, taking total suspensions to about 1,300 — 45 per cent of the market — as companies seek shelter from the rout.
“I’ve never seen this kind of slump before. I don’t think anyone has. Liquidity is totally depleted,” said Du Changchun, an analyst at Northeast Securities.
