China Drags Asian Equities to Three Week Low

July 27, 2015 Share Print 0

Asian stocks fell to three-week lows on Tuesday as a deepening rout in Chinese stocks erased risk appetite – sending investors flocking to safe-haven instruments such as government bonds and the Japanese yen. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.8 percent in early deals, its lowest level since July 9 as mainland Chinese indexes opened 2- 5 percent lower.

“Volatility is the enemy of investor appetite,” said the head of index trading at a U.S. fund. “Any sign of government support to prop up the market will be used by investors to exit the market completely rather than add fresh positions.” Since hitting a peak in early June, Chinese shares have gone through a roller-coaster ride with main China indexes falling by a third in less than a month before rebounding by a quarter, only to stage its biggest one-day fall since 2007.

While broader Asian markets have been initially resilient to the fireworks in Chinese stocks, they have started to move more closely in step with the mainland over recent days in the absence of fresh triggers elsewhere. Correlations between the MSCI gauge for regional stocks and the Shanghai index .SSEC has risen to 0.5 – its strongest in nearly a year – indicating the market rout is starting to have a broader regional impact.

Reuters

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.