- Title: MARKETS-ASIA/OPEN Asia stocks extend losses on yuan shock in early trade
- Date: 12th August 2015
- Summary: SHANGHAI, CHINA (AUGUST 12, 2015) (REUTERS) PEOPLE TRADING STOCKS IN BROKERAGE PEOPLE SITTING AT DESK LOOKING AT COMPUTERS COMPUTER SCREEN SHOWING STOCK CHARTS HANDS ON KEYBOARDS PEOPLE LOOKING ON PEOPLE TRADING STOCKS IN A BROKERAGE VARIOUS OF SCREEN SHOWING STOCKS PEOPLE SITTING IN FRONT OF COMPUTERS ELDERLY MAN LOOKING AT STOCK CHARTS ELDERLY MAN LOOKING AT MOBILE PHONE MOBILE PHONE 85-YEAR-OLD STOCK TRADER SURNAMED SHI SITTING AT DESK LOOKING AT COMPUTER SCREEN (SOUNDBITE) (Mandarin) 85-YEAR-OLD STOCK TRADER SURNAMED SHI, SAYING: "The devaluation of the yuan is good for our exported goods. But it makes prices higher when we people travel abroad. It's like this, and nothing else. Whether it's good or bad? It's good and bad. Right? It reduces the pressure for our export industries." HONG KONG, CHINA (AUGUST 12, 2015) (REUTERS) HONG KONG STOCK EXCHANGE SQUARE HONG KONG AND CHINA FLAGS STOCK EXCHANGE FLOOR DURING OPENING BELL STOCKS BOARD VARIOUS OF TRADER IN STOCK EXCHANGE BOARD SHOWING HANG SENG INDEX DOWN 1.4 PERCENT STOCKS TICKER INDEPENDENT ECONOMIST AND MARKET STRATEGIST, GEOFF LEWIS, TALKING (SOUNDBITE) (English) INDEPENDENT ECONOMIST AND MARKET STRATEGIST, GEOFF LEWIS, SAYING: "The significance is being vastly exaggerated. The newspaper headlines today: 'the yuan's devaluation shakes the world'. The yuan, dollar bilateral rate has changed by two percent. That's not a major devaluation, not according to my books as an economist. Major currencies change by more than that almost every day. The problem is we've been used to the RMB, the yuan, being stable. It's basically a pegged exchange rate still despite all the talk about widening bands, capital account liberalization. China has fixed its exchange rate. The U.S. dollar has now strengthened, that's taken China up with it and China's lost competitiveness." BULL STATUES ON FOUNTAIN (SOUNDBITE) (English) INDEPENDENT ECONOMIST AND MARKET STRATEGIST, GEOFF LEWIS, SAYING: "I don't see this as signifying that the Chinese leaders think the economy is in danger, in immediate danger, of a hard landing. They just want to take a little bit of pressure off the exporters and this is one way to do it. Also it's quite useful to inject a little bit more two-way uncertainty with regard to market views on their RMB. Especially with regards to the borrowing activities of Chinese companies offshore." TOKYO, JAPAN (AUGUST 12, 2015) (REUTERS) TOKYO STOCK EXCHANGE (TSE) BUILDING SIGN READING (English): "JPX, TOKYO STOCK EXCHANGE" ELECTRONIC STOCK BOARD SHOWING NIKKEI AVERAGE VARIOUS OF TSE OFFICE STAFF WORKING TSE ROTATING STOCK PRICE TICKER SEOUL, SOUTH KOREA (AUGUST 12, 2015) (REUTERS) CARS AND BUSES PASSING ON SEOUL STREET PEOPLE WALKING ACROSS STREET INTERIOR OF DEALING ROOM AT KOREA EXCHANGE BANK ELECTRONIC BOARD SHOWING KOREA COMPOSITE STOCK PRICE INDEX (KOSPI) VARIOUS OF DEALERS WORKING ELECTRONIC BOARD SHOWING KOSPI AND USD/KRW EXCHANGE RATE MORE OF INTERIOR OF DEALING ROOM AT KOREA EXCHANGE BANK
- Embargoed: 27th August 2015 13:00
- Keywords:
- Topics: General
- Reuters ID: LVA3S4XQC5YHZK6162CBZBI2MVTG
- Aspect Ratio: 16:9
- Story Text: Asian stocks extended losses on Wednesday (August 12), feeling the aftershocks of China's surprise devaluation of the yuan, which hit U.S. equities overnight and pushed down already-weak emerging currencies.
China devalued the yuan by nearly 2 percent on Tuesday (August 11) in an attempt to prop up its flagging economy. The yuan's biggest fall since 1994 hit emerging currencies from South Korea to South Africa, making the dollar broadly sought.
On Wednesday morning, China's major stock indexes fell after the central bank allowed the yuan to fall for a second day, fueling concerns that a currency devaluation would make Chinese equities less attractive.
"The devaluation of the yuan is good for our exported goods. But it makes prices higher when we people travel abroad. It's like this, and nothing else. Whether it's good or bad? It's good and bad. Right? It reduces the pressure for our export industries," said 85-year-old trader, Shi.
The CSI300 index fell 0.9 percent to 4,030.72 points by 0131 GMT, while the Shanghai Composite Index lost 1.1 percent to 3,886.01.
In Hong Kong, however, independent economist and market strategist Geoff Lewis felt the devaluation was being blown out of proportion.
"The significance is being vastly exaggerated. The newspaper headlines today: 'the yuan's devaluation shakes the world'. The yuan, dollar bilateral rate has changed by two percent. That's not a major devaluation, not according to my books as an economist. Major currencies change by more than that almost every day. The problem is we've been used to the RMB, the yuan, being stable. It's basically a pegged exchange rate still despite all the talk about widening bands, capital account liberalization. China has fixed its exchange rate. The U.S. dollar has now strengthened, that's taken China up with it and China's lost competitiveness," he said.
The devaluation by the People's Bank of China (PBOC) also raised further questions regarding the health of the Chinese economy and cooled appetite for risky assets and commodities, but Lewis played down concerns.
"I don't see this as signifying that the Chinese leaders think the economy is in danger, in immediate danger, of a hard landing. They just want to take a little bit of pressure off the exporters and this is one way to do it. Also it's quite useful to inject a little bit more two-way uncertainty with regard to market views on their RMB. Especially with regards to the borrowing activities of Chinese companies offshore," he added.
The Hang Seng index in Hong Kong was down 1.5 percent to 24,129.18.
Meanwhile, Japan's Nikkei average fell 1.1 percent to 20,495.40, hitting its lowest level in more than a week, while the broader Topix fell 1.0 percent to 1,670.89.
The South Korean won sharply fell to its weakest in almost four years per dollar on Wednesday morning, while stocks slid to a near six-month low.
The Korea Composite Stock Price Index (KOSPI) was down 1.2 percent at 1,962.33 points, after falling as low as 1,960.95, the lowest since Feb. 17. - Copyright Holder: REUTERS
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