Wednesday, July 8, 2015

Article - China panic feeds into Australian sharemarket

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The ASX fell 2 per cent on Wednesday, as China's wild plunges weighed on sentiment. Photo: Reuters


China panic feeds into Australian sharemarket

Date July 8, 2015 - 8:12PM

Australian investors were caught up in a $500 billion region-wide selloff as the storm besetting Chinese markets deepened and key commodity prices fell.

The benchmark S&P/ASX 200 index plummeted 2 per cent on Wednesday, to 5469.5, handing back Tuesday's equally strong gains with miners and banks hit hardest.

Plunging prices for iron ore, oil and copper led the local market down in early trade, but when China's trading session opened in the late morning and the Shanghai Composite Index dropped 8 per cent within minutes the ASX slumped further and struggled to regain ground. The Chinese dramatic fall was all the more surprising because more than half of its shares were in a government-imposed trading ban.
The ASX fell 2 per cent on Wednesday, as China's wild plunges weighed on sentiment.


"You could argue that China's financial market is becoming more integrated in global investor sentiment," Commonwealth Bank China and Asia economist Wei Li said.

"Panic starts to feed on itself. There may not be any direct relationship between [the markets] but they affect each other," he said.

There was certainly concern from the Chinese market regulator that fear was feeding some of the trading.

"There is panic in the stockmarket; irrational sell-offs have increased greatly and that has led to liquidity tension," a spokesman for the China Securities Regulatory Commission said.

<a href="http://www.smh.com.au/business/markets/china-panic-feeds-into-australian-sharemarket-20150708-gi7nyk.html" target="_blank">Read More</a>
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