Home' Trinidad and Tobago Guardian : January 7th 2016 Contents JANUARY 7 • 2016 www.guardian.co.tt BUSINESS GUARDIAN
INTERNATIONAL | BG21
China's stock market lurched lower again Monday, triggering "circuit
breakers" that halted trading. The slump was the latest episode in
months of turmoil for Chinese investors.
The biggest one-day declines since June and government responses:
June 26: The benchmark Shanghai Composite Index falls 7.4 per
cent as part of a slide triggered by investor concern a change in bank
regulations is aimed at limiting credit to finance trading.
June 27: Beijing cuts interest rates for a fourth time since November
to reassure investors of official support for the market.
June 29: The government announces its main pension fund for civil
servants will be allowed for the first time to invest in stocks.
July 1: Mainland China's two stock exchanges in Shanghai and Shen-
zhen cut trading fees by 30 per cent.
July 3-5: Regulators cancel initial public stock offerings in response
to fears of too little demand. Authorities pour more money into a
state-owned fund that finances stock trading. Brokerages create a 120
billion yuan (US$19 billion) fund to buy shares.
July 8: Regulators announce insurance companies will be allowed to
invest more in stocks. Brokerages expand their stock-buying fund. An
arm of China's sovereign wealth fund says it will buy shares.
July 27: After more than 1,000 companies suspend trading in their
shares, the Shanghai Composite Index falls 8.5 per cent despite a gov-
ernment ban on sales by major shareholders.
August 19: The Shanghai index declines 5.0 per cent but rebounds in
the last minutes of trading to close up 1.2 per cent in what analysts say
might have been the last major government intervention.
August 24: The Shanghai benchmark falls 8.5 per cent in its biggest
one-day loss in eight years. It ends down 38 per cent from its June 12
August 25: The Shanghai index loses 7.6 per cent to hit an eight-
month low. Beijing cuts interest rates for a fifth time in nine months.
January 4: The index loses 6.9 per cent in its first trading day of
2016. Trading is halted for the day after a broad market index, the CSI
300, falls 7.0 per cent by early afternoon, triggering a newly enacted
"circuit breaker" on its first day of operation. AP
Fresh evidence of China s eco-
nomic slowdown sent world
stock markets tumbling on
Monday, with Europe fol-
lowing Asia sharply lower in
a gloomy start to 2016.
Shanghai equities plunged seven percent,
leading an Asian meltdown, as more weak
factory data fanned fears about the health
of the world s second biggest economy.
In early morning deals in Europe, Frankfurt
stocks dived 3.5 per cent, Paris shed 2.4 per
cent and London lost 2.1 per cent with
China-exposed mining companies falling
"If today s activity in Chinese equity mar-
kets is an indication of the year ahead then
we are likely set for a bumpy 2016," said
CMC Markets analyst Brenda Kelly.
London s top faller was mining giant Anglo
American, which tanked by almost nine per
cent in value on demand fears in leading
commodity consumer China. Peers Glencore
and Antofagasta shed about seven and five
per cent respectively.
Global markets were also spooked over
the flare-up in tensions between Iran and
Saudi Arabia, as investors returned to their
desks after the Christmas and year-end hol-
World oil prices edged higher as key crude
exporter Saudi Arabia cut diplomatic ties
with fellow OPEC member Iran after a row
over the Saudi execution of a Shiite cler-
"On the first trading day of 2016, the
markets have got off to a shocking start,"
added analyst Manoj Ladwa at brokerage
"The problems in the Middle East have
taken a turn for the worse with the Saudi-
Iran stand-off. And China has only added
to the negative sentiment as their economy
shows further signs of slowing," he told
"Not the best start to the New Year but
if the market is able to get the current bear-
ishness out of the way, a recovery in stocks
by the end of the week is a strong possi-
Authorities in China suspended trading
on its stock markets in the early afternoon
after shares collapsed.
The drop in the CSI300 index---which
covers the Shanghai and Shenzhen bours-
es---for the first time triggered an automatic
early closure under a "circuit breaker" mech-
anism to curb volatility, after an earlier 15-
minute trading halt failed to stem the
The sharp losses revived memories of the
summer rout that saw Shanghai crash about
40 per cent and trillions of dollars wiped
Dealers began selling immediately after
data from official and private surveys of
manufacturing showed activity shrinking
The reports are the latest to highlight
weakness in the economy, which is expected
to have grown in 2015 at its slowest pace
in a quarter of a century.
Adding to the selling is the looming expi-
ration of measures brought in to curb last
year s share slump.
China on Monday also cut the yuan s
value against the greenback, making it weak-
er than 6.5 for the first time in more than
four-and-a-half years, as pressure on the
currency mounts from the country s growth
"Despite the use of circuit breakers to
pause trading amid aggressive falls, the halt
failed to stop the downward momentum of
Chinese stocks, after manufacturing PMI
disappointed," said Rebecca O Keeffe, head
of investment at online broker Interactive
"The extreme reaction of investors in
China ... suggests that the market is highly
risk averse and New Year cheer is in short
Markets across Asia were stung by the
data, as well as news that Saudi Arabia had
severed diplomatic ties with its old foe Iran
on Sunday after protesters ransacked its
embassy in Tehran following the execution
of a Shiite cleric.
Riyadh gave Iranian diplomats two days
to leave the kingdom, while the supreme
leader in Tehran said Saudi Arabia would
face "quick consequences" for the execution.
The developments are the latest to inflame
the region and join a list of negative news
that hurt world markets over the past year,
including China s economic malaise, plung-
ing oil prices and anaemic global growth.
Investors meanwhile fled to safe invest-
ments such as the US dollar and yen, sending
stocks and emerging-market currencies
A stock investor pauses
near a display board
showing stock prices in
green to symbolise a fall
in price at a brokerage
house in Jiujiang in
central China's Jiangxi
January 4, 2016. China's
Shanghai stock index
plunged nearly seven
per cent on Monday and
trading in Chinese
shares was halted for
the remainder of the day
manufacturing data and
Middle East tensions
weighed on Asian
China sparks global stocks slump
Growth in Britain s private sector picked up speed
in the three months to December and companies think
the momentum will carry on into early 2016, a leading
employers group said, suggesting a recent slowing of
the economy might be easing.
The Confederation of British Industry said on Mon-
day its monthly growth indicator---based on surveys
of manufacturers, retailers and services---rose to a
three-month high of +20 from +13 in November and
was above a long-run average of +5.
"The UK economy has finished the year strongly,
with business services acting as a lightning rod for
growth," said Carolyn Fairbairn, the CBI s director-
"Nonetheless, there is no room for complacency in
2016 as significant challenges to global growth remain."
A separate survey of chief financial officers of large
British companies, conducted by accountants Deloitte,
showed business confidence fell back to levels last
seen in 2012. Growth in business services offset a
slight fall in manufacturing in the three months to
December, the CBI said.
The slowdown in the global economy and the
strength in sterling have hampered British exports,
leaving the recovery reliant on consumers who have
been helped by a combination of low inflation, near
rock-bottom interest rates and rising wages.
Britain s economy has outpaced many of its peers
in the developed world over the past couple of years
but growth slowed to 0.4 per cent in the third quarter,
according to unexpectedly weak official figures published
in December. In 2015 as a whole, growth is likely to
have slowed to around 2.2 per cent, down from 2.9
per cent in 2014.
The Bank of England has said it expected the econ-
omy to grow by 0.6 per cent in the fourth quarter of
2015. It is watching for signs of stronger wage growth
before moving towards its first interest rate hike since
before the financial crisis.
The CBI survey found output expectations for the
next three months rose to +20 in December from +17
Some economists have warned that uncertainty
over Britain s planned referendum on its membership
of the European Union could hurt growth in 2016.
Prime Minister David Cameron has said he will hold
the referendum within the next two years. Reuters
Favourable economic conditions and an influx of
foreign workers boosted employment in Germany to
its highest since reunification in 1990, according to
data published on Monday as the jobless rate hovers
at a historic low.
Around 43 million people living in Europe s largest
economy were in work last year, up 0.8 per cent on
2014 and a 12th consecutive annual increase, the
Federal Statistics Office data showed.
It said an inflow of workers from eastern European
states including Romania, Bulgaria and Croatia as
well as from countries hit hard by the euro zone crisis
such as Greece, Portugal and Spain had boosted
Meanwhile, more people already living in Germany
had found jobs thanks to the robust economy.
Germany s unemployment rate has repeatedly
reached monthly post-reunification lows in 2015 and
fell in November to 6.3 per cent from 6.4 per cent
the previous month, according to Federal Labour
Office data. December s data is due on Tuesday.
Croatian citizens have been able to work in Germany
without restriction since the start of July, and Roma-
nians and Bulgarians to take jobs in all European
Union countries without a work permit since the
beginning of 2014.
Germany saw a record influx of migrants last year,
with 1.09 million entering the country according to
one newspaper. Reuters
UK economy finished
2015 strong---says CBI
Robust economy and
immigration push German
employment to record high
A year of turmoil on the Chinese stock market...
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