China’s stocks tumbled to the lowest levels in 13 months amid concern capital outflows will accelerate as the economy slows and support for the yuan eats into the nation’s foreign reserves.
The Shanghai Composite Index plunged 6.4 percent to 2,749.79 at the close. All industry groups slumped, ranging from commodity companies to new-economy shares such as technology. Besides data showing outflows hitting an estimated $ 1 trillion last year, investors were concerned about a possible cash squeeze even as the central bank flooded the financial system before the upcoming Chinese new year holiday. Some of the nation’s most accurate forecasters said the benchmark index may not bottom until it falls to the 2,500 level.
China’s stocks fell for the first time in three days amid concern capital outflows may intensify as the economy slows.
The Shanghai Composite Index dropped 1.5 percent to 2,896.03 as of 10 a.m. local time. PetroChina Co. and coal producers slumped after oil prices slid below $ 30 a barrel. The Hang Seng China Enterprises Index decreased 2.3 percent.
Huang Weimin, whose Chinese stock-index futures wagers returned more than 6,200 percent last year, says the Shanghai gauge could drop another 15 percent in the first half as slowing economic growth and a weaker yuan fuel capital outflows. Outflows jumped in December, with the estimated 2015 total reaching $ 1 trillion, more than seven times higher than the whole of 2014 based on Bloomberg Intelligence data dating back to 2006.