Monday, 31 August 2015 12:22
HONG KONG: Chinese stocks tumbled again Monday, leading Asian bourses lower as uncertainty over US interest rates revived fears of a broader global economic slowdown that has rocked financial markets.
Analysts warned of further gyrations following a rollercoaster ride last week, with investors shifting into safe-haven assets such as the yen and gold, while oil sagged.
Shanghai sank 2.61 percent in the morning. The index plunged more than 16 percent from Monday to Wednesday before bouncing 10 percent in the next two sessions.
The rebound came after Beijing cut the cost of borrowing — its fifth interest rate reduction since November — in a bid to pump up the country’s economy, which is a key driver of global growth.
Other regional indexes followed suit after enjoying healthy gains on Friday. Hong Kong lost 0.41 percent, Tokyo fell 1.05 percent and Sydney was 1.11 percent lower while Seoul shed 0.49 percent.
The extreme swings in China — which has seen Shanghai lose about 40 percent since hitting a June 12 high — have fuelled concerns that Beijing is struggling to get a grip on its economic slowdown.
Analysts say China needs to rebalance its economy so that it relies more on consumer demand and less on lavish state spending.
A successful transition is seen as crucial for the worldwide economy.
On Friday, credit rating agency Moody’s slashed its 2016 growth forecast for leading G20 economies to 2.8 percent from 3.1 percent, predicting contractions in Brazil and Russia and lower demand for manufactured goods in Korea and Japan due to problems in China.
Comments from US Federal Reserve Vice Chairman Stanley Fischer at the weekend that left open the possibility of a September hike in interest rates have added to nervousness.
The historically low US interest rates of recent years have fuelled investment in global stock markets because they have made it cheap to borrow money for speculation.
A rise would likely tamp down that appetite.
