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Chinese Markets Rise After Volatile Opening Chinese Markets Rise After Volatile Opening
(35 minutes later)
HONG KONG — With Beijing’s grip slightly looser, Chinese markets steadied on Friday.HONG KONG — With Beijing’s grip slightly looser, Chinese markets steadied on Friday.
Exchanges in Europe also rose modestly at the start, and futures trading indicated that Wall Street would open higher.Exchanges in Europe also rose modestly at the start, and futures trading indicated that Wall Street would open higher.
“Circuit breakers” that were supposed to keep China’s markets from dropping disastrously over the course of a day had been removed the previous night. Friday’s market action followed a Thursday-night decision by the Chinese government to stop using “circuit breakers” that were supposed to keep China’s markets from dropping disastrously over the course of a single trading day.
The system, established on Monday, had been tripped twice in the past week and had halted trading, yet the events had seemed to spook investors into broader sell-offs when activity resumed. The circuit-breaker system, used for the first time on Monday, had been tripped twice in the past week. But that supposed safeguard had seemed to spur nervous investors into broader sell-offs, once activity resumed.
On Friday, shares in both Shanghai and Shenzhen rose despite a shaky opening hour, with sharp drops and rises within minutes of each other.On Friday, shares in both Shanghai and Shenzhen rose despite a shaky opening hour, with sharp drops and rises within minutes of each other.
Markets seemed “a little more normal,” said Thomas Gatley, a corporate analyst at Gavekal Dragonomics, a financial research company.Markets seemed “a little more normal,” said Thomas Gatley, a corporate analyst at Gavekal Dragonomics, a financial research company.
“We think that is in part a bunch of mutual funds who couldn’t liquidate the previous day,” Mr. Gatley said of the seesawing early in the morning. Of the seesawing early in the morning, Mr. Gatley said, “We think that is in part a bunch of mutual funds who couldn’t liquidate the previous day.”
The tripping of the circuit breaker on Thursday meant that trading lasted less than half an hour that day.The tripping of the circuit breaker on Thursday meant that trading lasted less than half an hour that day.
“The removal of the circuit breaker has removed that magnet effect that when things were down 3 percent, there was the other risk that everyone got stuck,” he added.“The removal of the circuit breaker has removed that magnet effect that when things were down 3 percent, there was the other risk that everyone got stuck,” he added.
The China Securities Regulatory Commission also extended a ban on sales by major shareholders, which had been set to expire on Friday. Some feared the sell-off was in part prompted when those with smaller holdings sold off before the bigger shareholders did.The China Securities Regulatory Commission also extended a ban on sales by major shareholders, which had been set to expire on Friday. Some feared the sell-off was in part prompted when those with smaller holdings sold off before the bigger shareholders did.
Stocks opened higher on Friday morning in China, but in the early volatility, a quick sell-off within 30 minutes was followed by another increase by midmorning. Shares continued to rise after lunch, and by the close of day, the CSI 300 blue-chip index was up about 2 percent. The Shanghai composite index finished nearly 2 percent higher, while the Shenzhen composite index, which had been down as much as 4 percent, ended 1.2 percent higher.Stocks opened higher on Friday morning in China, but in the early volatility, a quick sell-off within 30 minutes was followed by another increase by midmorning. Shares continued to rise after lunch, and by the close of day, the CSI 300 blue-chip index was up about 2 percent. The Shanghai composite index finished nearly 2 percent higher, while the Shenzhen composite index, which had been down as much as 4 percent, ended 1.2 percent higher.
Hao Hong, the chief market strategist at Bank of Communications International, noted that funds had been forced to sell at the open as investors pulled out their money. He added that it also seemed likely that the so-called national team of state-influenced brokerage firms had been pushed to shore up the markets.Hao Hong, the chief market strategist at Bank of Communications International, noted that funds had been forced to sell at the open as investors pulled out their money. He added that it also seemed likely that the so-called national team of state-influenced brokerage firms had been pushed to shore up the markets.
On Friday morning, the country’s central bank slightly raised the trading range for the renminbi and strengthened the currency, whose depreciation in the preceding three weeks had stoked concerns among investors. It was set at 6.5636 renminbi to the dollar, compared with 6.5646 on Thursday. It remains near its weakest point since early 2011.On Friday morning, the country’s central bank slightly raised the trading range for the renminbi and strengthened the currency, whose depreciation in the preceding three weeks had stoked concerns among investors. It was set at 6.5636 renminbi to the dollar, compared with 6.5646 on Thursday. It remains near its weakest point since early 2011.
“It certainly helped to stabilize sentiment today,” said Mitul Kotecha, head of Asia foreign exchange and rates strategy for Barclays. “There were major concerns that China would continue to weaken the fixings.”“It certainly helped to stabilize sentiment today,” said Mitul Kotecha, head of Asia foreign exchange and rates strategy for Barclays. “There were major concerns that China would continue to weaken the fixings.”
The Chinese government has been allowing the value of the renminbi to decline steadily, which could bolster exports and growth. But the movement has also unsettled investors and pushed money out of the country.The Chinese government has been allowing the value of the renminbi to decline steadily, which could bolster exports and growth. But the movement has also unsettled investors and pushed money out of the country.
Although the shift on Friday was slight, it still provided a sense of respite, Mr. Kotecha said.Although the shift on Friday was slight, it still provided a sense of respite, Mr. Kotecha said.
“When you have several days of weaker fixings, markets are fearing the worst,” he said. “To have a break is a calming factor.”“When you have several days of weaker fixings, markets are fearing the worst,” he said. “To have a break is a calming factor.”
The aftershocks of Thursday’s plunge rippled through global market. The S.&P. 500 ended the day on Thursday down 2.3 percent, while the Euro Stoxx 50 finished 1.7 percent lower.The aftershocks of Thursday’s plunge rippled through global market. The S.&P. 500 ended the day on Thursday down 2.3 percent, while the Euro Stoxx 50 finished 1.7 percent lower.
The Euro Stoxx 50 opened on Friday with a slight increase of 0.1 percent. The FTSE 100 in London, the DAX in Frankfurt and the CAC40 in Paris also rose initially, but they were mixed at midday.The Euro Stoxx 50 opened on Friday with a slight increase of 0.1 percent. The FTSE 100 in London, the DAX in Frankfurt and the CAC40 in Paris also rose initially, but they were mixed at midday.
Markets were mixed in Asia. Japan’s Nikkei 225 finished down almost 0.4 percent. The S.&P./ASX 200 in Australia closed down nearly 0.4 percent after spending most of the day down, while Hong Kong’s Hang Seng index ended up 0.6 percent. Markets were mixed in Asia and Australia. Japan’s Nikkei 225 finished down almost 0.4 percent. The S.&P./ASX 200 in Australia closed down nearly 0.4 percent after spending most of the day down, while Hong Kong’s Hang Seng index ended up 0.6 percent.
Although the Chinese markets looked a little more stable on Friday, Mr. Gatley said he expected more volatility, noting that valuations were pretty high. Although the Chinese markets looked a little more stable on Friday, Mr. Gatley, the corporate analyst, said he expected more volatility, noting that valuations were pretty high.
“The other thing you can’t write out is more policy missteps from C.S.R.C. and more anticorruption probes, which are profoundly destabilizing,” he added, referring to the China Securities Regulatory Commission. “The other thing you can’t write out is more policy missteps from C.S.R.C. and more anticorruption probes, which are profoundly destabilizing,” he added.
Mr. Hong at the Bank of Communications was similarly apprehensive.Mr. Hong at the Bank of Communications was similarly apprehensive.
“We have a small reprieve,” he said. “I wouldn’t be jumping for joy. The fundamentals are still weak. Valuations are still high.”“We have a small reprieve,” he said. “I wouldn’t be jumping for joy. The fundamentals are still weak. Valuations are still high.”
“The stock market is starting to reflect what is really going on in the economy,” he added.“The stock market is starting to reflect what is really going on in the economy,” he added.