Despite Beijing’s efforts to calm markets, China equities are the worst performers in the region today. And this week. And this month. And this year.
The Shanghai Composite ended the morning down 1.5 per cent, wiping out most of its late Thursday rally. For the week the benchmark is down 7.1 per cent, more than any other index in Asia.
The tech-heavy Shenzhen Composite suffered a 0.9 per cent fall, placing its weekly loss at 6.9 per cent.
The two indices are now 16.3 per cent and 20.2 per cent down in the first 10 sessions of 2016.
The worst Asian indices outside of China this year are:
- Hong Kong’s Hang Seng Index: -10.3% (down 0.8% today)
- Japan’s Nikkei 225: -9.3% (up 0.2% today)
- Singapore’s Straits Times Index: -8.1% (up 0.1% today)
Meanwhile, it appears the People’s Bank of China is having a tough time keeping currency speculators in check. The chart below clearly shows CNH, the offshore currency, weakening again despite six consecutive sessions of stable fixes (for the onshore rate), as well as moves earlier in the week to prop up the offshore rate and tighten liquidity.
Here is CNH versus the daily fix, and also against the onshore rate:
In terms of new data, the latest figures painted a mixed picture for the state of lending in China.
“Aggregate financing,” the broadest measure of Chinese credit growth available, jumped 78 per cent between November and December, to Rmb1.820tn ($276bn) — the most since June, according to the National Bureau of Statistics. But “new yuan loans”, which track borrowing in the normal banking sector, were only Rmb598bn, about Rmb100bn below forecasts and accounting for less than a third of the month’s total.
“The lower-than-expected new loans suggest that credit demand remained weak, and commercial banks were still reluctant to lend due to rising credit risks,” said analysts at ANZ. “The surge in aggregate financing suggested that off-balance sheet financing picked up again in December.”