Update | Shanghai Composite crashes into bear market territory, while Hong Kong stocks rack up third week of losses
Shanghai Composite closes the week on downbeat note, shedding 3.6pc, or more than 20pc down from its recent high, technically entering into a bear market
China markets plunged into bear market territory Friday afternoon, while Hong Kong markets also closed lower as investor sentiment soured amid volatility in the Chinese currency and concerns over the economic outlook.
The mainland’s benchmark Shanghai Composite Index shed 3.6 per cent or 106.68 points Friday to finish at 2,900.97. The close, its lowest finish since December 2014, reflects a 20 per cent drop from a high on December 22, matching the technical criteria for a bear market. The index has fallen by 18 per cent this year, and is down 44 per cent from last year’s peak in June.
Meanwhile, the Shenzhen Composite Index finished at 1,796.13, down 3.4 per cent, or 63.24 points, for a weekly loss of 9.2 per cent. The ChiNext slid 2.9 per cent or 62.11 points to 2,112.90.
“Fear dominated the first two weeks,” said Bernard Aw, an analyst from IG Group. The declines were triggered by the sell-off in Chinese markets and fears of further yuan devaluation, he said.
Moving forward, traders will closely watch a number of key data for economic clues, including China’s fourth quarter data and full year GDP, US housing and CPI data, and quarterly financial results of major US corporations, Aw added.
Louis Tse Ming-kwong, Director of VC Brokerage, said that Friday’s fall can also be attributed to skittish investor sentiment from the expiration of futures contracts and a lack of support from the central government in contrast to Thursday.
