China’s volatile stock markets fell more than 1 percent on Wednesday, though mounting chatter about imminent policy stimulus provided some support against the backdrop of a fresh slide in oil prices, which hit stock markets across the globe.
Asian and European stocks were down sharply as U.S. crude sank beneath $28 a barrel for the first time since 2003, hammering energy stocks and boosting safe havens. [MKTS/GLOB]
The benchmark Shanghai Composite Index closed down a fraction over 1 percent after a 3.25 percent bounce on Tuesday [.SS], while the CSI300 index of the largest listed companies in Shanghai and Shenzhen lost 1.5 percent, having risen 2.95 percent the previous session.
Tuesday’s jump was fueled by expectations that the People’s Bank of China (PBOC) would soon act to loosen monetary policy further after the latest data confirmed economic growth hit a 25-year low last year.
The indexes are down 15-16 percent so far in 2016 after a series of sharp sell-offs.
On Tuesday, the statistics bureau also released weaker-than-expected readings on industrial output and retail sales for December, while the Commerce Ministry said on Wednesday that foreign direct investment fell in the final month of the year, and China’s external trade faced relatively severe pressure in 2016.
A new survey by the American Chamber of Commerce in China showed that the slowdown is hitting profits at more foreign companies operating on the mainland, and the vast majority believed China’s growth would fall well short of the central bank’s forecasts of 6.8 percent this year.
Economic concerns have also pressured China’s yuan currency, which is down about 5 percent since August, encouraging a destabilizing outflow of capital.