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Asia: Stocks erase losses as China shares, copper mount rebound
[WELLINGTON] Asian stocks erased losses and US equity-index futures climbed as some of the most heavily sold shares in Hong Kong and China rebounded. Copper fluctuated with commodity-producers' currencies.
The MSCI Asia Pacific Index erased a loss of as much as 1.7 per cent by 12 pm in Tokyo, after touching its lowest level since January. Hong Kong's Hang Seng China Enterprises Index rallied 2.8 per cent after a five-day, 12 per cent rout. Shanghai's benchmark index fluctuated, with 50 pe rcent of the mainland equities halted. Standard & Poor's 500 Index futures rose 0.5 per cent. Copper swung to a 0.7 per cent gain, oil climbed and Australia's dollar erased a drop after a bigger- than-estimated employment increase.
China is bolstering efforts to arrest a selloff that has erased more than US$3 trillion of value and begun to ripple through risk assets globally. Chinese consumer prices rose more than estimated in June, while producer costs slumped a record 40th straight month. The Federal Reserve registered concern over China as early as last month, with meeting minutes signaling potential risks to the US from there and Greece.
"There's been much too much market intervention by the securities authorities, so it's really removed the ability of the Chinese mainland market to operate in a free manner," Michael Shaoul, who oversees US$5 billion, as chief executive officer at Marketfield Asset Management in New York, said on Bloomberg TV.
"At the same time, there's been much less intervention than you would want to see by the central bank. You need to see rate cuts not of 25 basis points but of 50 or 75 basis points."
Selling Ban Hong Kong's gauge of Chinese companies climbed after plunging 6.1 per cent on Wednesday, the worst single-day loss since 2011. China Railway Group Ltd jumped 11 per cent after plummeting 23 per cent in the previous five days. BYD Co, the electric-car maker backed by Warren Buffett, advanced 10 per cent after a 35 per cent, five-day loss.
China banned major stockholders from selling stakes in listed companies late Wednesday, the latest in a barrage of measures that have included cuts to interest rates and banks' reserve requirements. Brokerage Haitong Securities Co said it will buy back as much as 21.6 billion yuan (US$3.48 billion) of its Shanghai and Hong Kong-listed shares.
The new moves are a sign of "desperation" and will fuel fear among investors, said Mark Mobius, executive chairman of the Templeton Emerging Markets Group. The efforts just "postpone the inevitable," according to Wells Fargo Funds Management.
The magnitude of price swings on the Shanghai Composite gauge is at the highest since 2008, according to data compiled by Bloomberg. The benchmark gauge for China's largest equity venue dropped 5.9 per cent Wednesday to close at its lowest level since March 17. At least 1,331 companies halted trading on mainland exchanges and another 747 slumped by the 10 per cent daily limit.
West Texas Intermediate crude oil rose 1 per cent to US$52.15 a barrel in New York, heading for its first increase in six days. US stockpiles unexpectedly rose last week, signaling a glut isn't easing. Brent added 0.8 percent in London.
The Aussie erased a drop of as much as 0.5 per cent to climb 0.4 per cent after the economy added 7,300 jobs in June, beating economists' forecasts for no change. The better-than-estimated jobs number helped to counter concern about demand for commodities from China - the biggest trading partner - amid a collapse in iron ore prices.
Iron ore with 62 per cent content delivered to Qingdao sank 10 per cent to US$44.59 a dry metric ton on Wednesday, according to Metal Bulletin Ltd.
Steel demand in China is shrinking while iron ore supplies are still rising, Andy Xie, an independent economist who predicted a collapse in prices in February. He is forecasting a metric ton of the raw material will trade in the US$30s this year.