business

China sends world markets sliding

March 08, 2016

Most Asian markets have fallen after China's exports dived more than a quarter on-year in February. – The Malaysian Insider file pic, March 8, 2016.World stock markets sank deep into the red on Tuesday, as China released data showing another hefty slump in exports, sparking renewed worries over the nation's powerhouse economy.

China's exports dived more than a quarter on-year in February, new data showed Tuesday, while imports were almost 14% off – far worse than forecast.

"That shocking slide in exports was joined by at similarly weak, if not quite as alarming, drop in imports – combine the two together and it is the kind of ugly reminder of China's spluttering economy investors certainly do not need at the moment," said analyst Connor Campbell at trading firm Spreadex.

In reaction, most Asian markets fell, with investors also cashing in after enjoying their best rally so far this year.

Hong Kong retreated 0.7% and Tokyo dropped 0.8%, but Shanghai reversed initial heavy falls to eke out slender gains.

The gloom spilled over into Europe, with Frankfurt and Paris shedding 1.2% and 1.3% respectively, while London lost 0.8%.

“Equity markets (are) in the red again, with disappointing overnight Chinese trade data showing plunging February exports serving to spook investors who are already concerned about the state of global growth," said head of research Mike van Dulken at Accendo Markets.

"The market reaction is in stark contrast to the habitual cheering about bad data implying more stimulus, and the Lunar New Year may explain the big drop."

Mining stocks were the hardest hit sector on demand jitters because China is a leading consumer of most raw materials.

In London, resources giant Anglo American saw its share price tumble 9.3% to 569.70 pence, topping the FTSE 100 fallers' board.

Swiss rival Glencore shed 7.64% to 157.70 pence, Rio Tinto dropped 5.65% to 2,110.50 pence and Antofagasta was down 5.06% at 562.50 pence.

In Paris, the share price of steelmaking titan ArcelorMittal dived almost 5.0% to €4.43 (RM20.05), while Germany's ThyssenKrupp slid 1.8% to €16.88 in Frankfurt.

German energy giant RWE saw its shares slide 2.30% to €11.03, after it posted falling annual profits and forecast fresh gloom for 2016.

Europe's energy sector also took a knock from oil prices, which pulled back following healthy gains on Monday – when Brent crude broke the US$40 (RM164.40)-per-barrel barrier for the first time in 2016.

The gloomy Chinese figures are the latest to highlight weakness in the economy, although officials pointed out that they were skewed by the Chinese New Year holiday that saw factories shut down for a week.

However, Frederic Neumann, co-head of Asian economic research at HSBC Holdings in Hong Kong, added, "Exports got pummelled again in February, highlighting the downturn in global demand.

"It's easy to blame Chinese New Year distortions, but there is a much deeper malaise that is becoming apparent in the numbers."

The Chinese customs data was released as the nation's leaders hold their annual policy gathering, which started Saturday with Premier Li Keqiang targeting 6.5% to 7% economic growth this year.

Key figures around 1200 GMT (8pm MYT)

London - FTSE 100: DOWN 0.8% at 6,134.50 points

Frankfurt - DAX 30: DOWN 1.2% at 9,660.40

Paris - CAC 40: DOWN 1.3% at 4,384.50

EURO STOXX 50: DOWN 1.1% at 2,986.90

Tokyo - Nikkei 225: DOWN 0.8% at 16,783.15 (close)

Shanghai - composite: UP 0.1% at 2,901.39 (close)

Hong Kong - Hang Seng: DOWN 0.7% at 20,011.58 (close)

New York - Dow: UP 0.4% at 17,073.95 (close)

Euro/dollar: UP at US$1.1016 from US$1.1013 on Monday

Dollar/yen: DOWN at 112.91 yen from 113.41 yen. – AFP, March 8, 2016.