Shanghai rebound, retreat of new Asia stock imminent


HONG KONG — Shanghai stocks saw another day of volatility Thursday, swinging sharply from big early losses to end on a high while most other Asian bourses tracked a Wall Street slump in the latest rout on world markets. Any hope Wednesday’s regional rally might presage a recovery from the recent bloodbath was wiped out with an immediate sell-off in the opening minutes. Tokyo plunged almost 4 percent in the first hour and Shanghai fell below its lowest levels of the summer rout. However, Shanghai ended slightly more positively — rising 2 percent — as investors moved to pick up cheap stocks.

“The market has fallen too much and there are some investors looking for bargains,” said Dai Ming, a fund manager at Hengsheng Asset in Shanghai. The state-backed Securities Times also said 28 firms on the ChiNext index of small caps in Shenzhen had pledged not to sell for six months to stabilize markets, while Bloomberg reported authorities had vowed to more closely monitor share sales by major stakeholders. It added that the government had likely not been behind the rebound by buying key state firms. Shanghai slumped almost 3 percent in the morning session, meaning it had lost about 20 percent since a December peak and making it the worst performer among 93 benchmark indexes tracked by Bloomberg. It lost 2.4 percent Wednesday despite a better-than-forecast mainland Chinese trade report. The broad-based sell-off in Asia came after Wall Street’s three main indexes saw big losses, with energy firms taking a hammering again as oil prices hit lows not seen since the first half of 2004. Japan’s Nikkei closed down 2.7 percent and Sydney shed 1.6 percent while Seoul was 0.9 percent lower and Hong Kong lost 0.6 percent in late trade — but all improvements from the morning session.

Energy companies, which were slammed in early exchanges, also clawed back as oil prices saw a slight improvement in the afternoon. CNOOC and PetroChina in Hong Kong shifted into positive territory, while Santos and Rio Tinto in Sydney more than halved their losses. But there remains unease. Michael McCarthy, chief strategist at CMC Markets in Sydney, said: “It’s hard to get bullish at this stage.” “The market focus keeps shifting whenever there’s positive news. We saw very good trade numbers from China yesterday and yet we’ve seen the rebound being short-lived as the focus shifted to commodities. Negative sentiment is dominating.” And China’s top diplomat, State Councilor for Foreign Affairs Yang Jiechi, warned it was “not possible to completely discard the possibility that (a global) economic crisis could once again take place, and the problem should not be neglected.” In early European trade Thursday London shed 1.2 percent, Frankfurt sank 1.3 percent and Paris slipped 1.2 percent.

Key figures at 0830 GMT, Jan. 14 Tokyo — Nikkei 225: DOWN 2.7 percent at 17,240.95 (close) Shanghai — Composite: UP 2.0 percent at 3,007.65 (close)

Hong Kong — Hang Seng: DOWN 0.6 percent at 19,817.41 (close)