Asian stocks tumbled Wednesday, with major indexes declining by more than 1 percent each, as global sentiment remained low on concerns over economic growth, China and low oil prices.
“The frailty in the Chinese growth remain the core problem for investors and the spotlights are not moving away from it anytime soon,” Naeem Aslam, chief market analyst at AvaTrade, said in a note Wednesday.
Overnight, the International Monetary Fund (IMF) cut its global growth forecast for 2016 to 3.4 percent, from 3.6 percent. The organization cited slower growth in emerging markets, especially in China, falling commodity prices, and rising interest rates in the U.S. as potential risks to global growth.
Markets in China opened in negative territory, following a 3.5 percent gain in the previous session after Beijing released a slew of data including the full-year growth number for 2015. The Shanghai composite was down 1.15 percent and the Shenzhen composite declined by 1.10 percent. The CSI300 was down 1.64 percent. Hong Kong’s Hang Seng index was down 3.77 percent.
The Chinese economy grew by 6.9 percent in 2015, according to official data, down from 2014’s 7.3 percent, and the slowest pace of economic expansion since 1990.
Some analysts believe further intervention and economic stimulus from Beijing are forthcoming as the country juggles a structural re-balancing act.
Cynthia Kalasopatan from Mizuho Bank said in a morning note, “Soft growth momentum led to expectations that Chinese authorities will need to implement further policy easing to support the economy.”
“More policy and RRR cuts may be in the pipeline,” she added, “What’s more, targeted fiscal tools may be used as well to spur growth.”
The People’s Bank of China (PBOC) said late on Tuesday it would inject more than 600 billion yuan ($ 91.22 billion) into the financial system to help ease a liquidity squeeze expected before the Lunar New Year holiday in early February.
Bucking the trend on the Shanghai index, state-owned China Communications Construction climbed 7.71 percent and China Power Construction added 2.82 percent.
But bank and property shares were sharply lower. Bank of China’s Hong Kong-listed shares dropped 1.97 percent and its Shanghai-listed ones fell 1.70 percent. Hong Kong-listed Shimao Property dropped 6.02 percent.
Before market open, the PBOC set the yuan mid-point rate at 6.5578, maintaining stability following the previous session’s fix of 6.5596.
Elsewhere, the China Securities Regulatory Body (CSRC) said it approved several initial public offerings (IPOs) under its revised rules, which took effect on Jan. 1, under which investors are no longer required to put up a capital subscription process, according to reports. The resumption of IPOs has been a concern as they tend to sop up market liquidity.
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