Hong Kong shares end down, investors wary after market slump

29 May 2015 | Author: | No comments yet »

Asia Stocks Pare Monthly Loss as Oil Rises; Europe Shares Steady.

TOKYO — Chinese share markets extended a bruising sell-off on Friday after the previous day’s plunge, while the dollar took a breather from a sharp run up this week.Chinese stocks capped a volatile week of trading with a second day of losses amid concern that nation’s world-beating rally has gone too far, too fast. Evergrande Real Estate Group Ltd., China’s third-biggest developer by assets, sank 27 percent in Hong Kong after raising HK$4.6 billion ($593 million) below a marketed price range. Jiangsu Broadcasting Cable Information Network Corp. rose by the 10 percent daily limit, taking gains since its initial public offering on April 27 to more than 1,000 percent.

The Shanghai Composite Index lost 0.2 percent to 4,611.75 at the close, after swinging between gains of as much as 1.7 percent and losses of 4.1 percent. The gauge tumbled 6.5 percent on Thursday after brokerages tightened lending restrictions and the central bank drained cash from the financial system, while the gauge’s 10-day volatility index climbed to the highest level since January. “The market is likely going to experience massive volatility,” said Gerry Alfonso, a Shanghai-based director at Shenwan Hongyuan Group Co. “People are getting nervous and having some very short time frames for investment. With valuations divorced from economic fundamentals, the heightened volatility we have seen is likely to continue.” European shares dropped overnight, with Germany’s DAX, France’s CAC and Greek stocks falling, while periphery eurozone bond yields rose. Thursday’s rout ended a seven-day, 15 percent surge for the gauge that saw it almost crossing with the 5,000 level for the first time in eight years.

The greenback was knocked off the peak as Japanese government officials used stronger language to describe recent moves, with Finance Minister Taro Aso saying the yen’s recent drop had been “rough”. The China Securities Journal said in a front page article on Friday that while share-price fluctuations are necessary, the market has solid foundations in reforms. The index is still up 126 percent over the past year, the biggest advance among major global benchmark indexes tracked by Bloomberg, and added 3.8 percent during May. Finance ministers gathering in Germany for a Group of Seven meeting scoffed at Greece’s optimism over debt repayments saying it needs stronger commitments to overhaul its economy. “The Chinese market looks hot and frothy but I wouldn’t say it’s a bubble,” said Evan Lucas, a market strategist at IG Ltd. in Melbourne. “There are risks out there.

Greece, which had claimed a solution could be reached by Sunday, hasn’t said how it will pay almost 1.6 billion euros ($1.75 billion) in IMF payments scheduled for next month. Evergrande slid after the company raised HK$4.6 billion net proceeds from a sale of 820 million shares at HK$5.67 each, according to a filing to the stock exchange Friday.

Combined turnover in Shanghai and Shenzhen rose to a record $380 billion amid the rout on Thursday, exceeding the value of shares traded in the U.S on Wednesday by $132 billion. The use of borrowed money is exaggerating market declines, and losing days on the Shanghai exchange this month have been deeper than at any other time since 2009. The Bloomberg Dollar Spot Index, a gauge of the currency versus 10 major peers, has gained 1 percent this week and is up 2.3 percent in May, on track for its 10th climb in 11 months. “The U.S. dollar rally is getting to the stage where it’s overdone and there is room for correction,” said Derek Mumford, director at Rochford Capital, a currency risk-management company in Sydney. “I don’t think that the U.S. economy is that strong.” A run of more positive U.S. data has bolstered bets rates will be boosted sooner rather than later, with Federal Reserve Chair Janet Yellen saying last week that borrowing costs will be increased this year. Ore with 62 percent content delivered to Qingdao was at $62.33 a dry metric ton on Thursday, 11 percent higher in May, according to Metal Bulletin Ltd.

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