Asia: Equities decline on yuan depreciation decision
Equities in Asia fell on Tuesday following reports the People'a Bank of China (PBOC) has taken an extreme stimulus step of allowing the Chinese currency to devalue almost 2%.
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The PBOC decided to depreciate the yuan in a bid to help exports and fight against the growth slowdown.
Following the news, the Shanghai composite index was broadly flat but Hong Kong's Hang Seng rose slightly by 0.07%.
Jonhatham Sudaria from London Capital Group said: "The extreme ‘one-off’ devaluation in the yuan last night has concerns brewing that things really aren’t ok in China and is tantamount to an admission by China’s elites. The move is seen as a desperate attempt at helping their exporters."
Craig Erlam from Oanda said the move appears to be a "knee-jerk reaction" to the poor trade data over the weekend and will now raise "many questions about whether the Fed can still seriously consider raising rates this year".
On day earlier, stocks in China rose 4.91% despite disappointing industrial production, consumer prices and trade balance data.
The indices were driven by speculation the government would accelerate mergers in state-owned industrials and telecoms. The negative data also brought hopes of more growth stimulus on its way.
On Tuesday, the PBOC released new loans data for July which improved to 1.48bn from 1.27bn a month earlier. Money supply also rose 13.3% from 11.8%.
In corporate news, e-commerce company Alibaba gained 2.12% and Suning jumped 10% after both firms announced a strategic partnership which will enable them to provide more convenient shopping experiences and a better customer service to users buying online and through mobile devices.
In other news, according to Reuters, the Chinese Communist Party is loking for an eventual replacemet for the top securities regulator Xiao Gang.
The PBOC decision to depreciate the yuan hurt other currencies in Asia, as investors believe they would need to fall to keep exports competitive with China.
In Japan, the Nikkei 225 lost 0.42% as investors worried about the country's exports to China, its biggest trading partner.
The yen was down 0.2% at ¥124.87 against the US dollar.
In economic data, machine tool orders were at 1.6% in July, down from 6.6% same time last year. However, money supply rose 4.1% from 3.9%.
The Bank of Japan is due to publish its policy meeting minutes later on Tuesday, as well as the domestic corporate good price index for July.
Elsewhere in Australia, the ASX index declined 0.65%.
The National Australia Bank declined 2.58% one day after rising on a 9% increase in profit growth.
Following the results, chief executive Andrew Thorburn said the bank is "well placed to respond to the Australia Prudential Regulatory Authority's announcement of an increase in mortgage risk weights from 1 July 2016".
Consumer electronics retailer JB Hi-Fi declined 7.28% after jumping 10% as it announced a 6.3% rise in net prfits to $136.5m and a share buyback of $15.2m.
Meanwhile, the Australian dollar continued to fall 0.89% at $0.735 against the US dollar.