(Bloomberg) -- Chinese financial markets fell as investors dumped emerging-market assets worldwide.
The Shanghai Composite Index lost 1.4 percent as of 10:06 a.m. local time, led lower by financials and consumer stocks. The yuan weakened 0.5 percent to 6.8796 per dollar as China’s central bank set the currency rate at the lowest since May 2017, while a former governor said China should avoid going back and forth on yuan policies. Stocks also fell in Hong Kong.
A spiraling currency crisis in Turkey has worsened sentiment for developing markets globally. China traders were already grappling with the wildest equity swings in more than two years, with sentiment shifting daily as investors considered whether support measures from China’s authorities would be enough to offset risks to economic growth. The People’s Bank of China indicated late Friday that while it’s conducting easier monetary policy than three months ago, it won’t use any “strong” economic stimulus.
“Investors are concerned the Turkey crisis would hurt the stability of the world economy and the global financial system,” said Ken Chen, Shanghai-based strategist with KGI Securities Co. “The decline in stocks and yuan are due to external factors after the Turkey crisis triggered selloffs in U.S. and European equities over the weekend and a jump in the U.S. dollar.”
Bank of East Asia Ltd. and China Merchants Port Holdings Co. slumped 6.8 percent and 4.3 percent in Hong Kong, respectively, after Hang Seng Indexes Co. said it will remove the stocks from the benchmark Hang Seng Index.
Sino Biopharmaceutical Ltd. and Shenzhou International Group Holdings Ltd., which will be added to the Hang Seng Index, rose at least 3 percent.
Foreign investors have been snapping up yuan-denominated shares despite the losses and volatility. MSCI Inc. will announce details on the second step of A-share inclusion before Tuesday’s market open, with all changes effective Sept. 3. Onshore shares’ inclusion factor will double to 5 percent.
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