A key China equities index closed at a fresh one-year low on Thursday and the renminbi weakened further after a turnround on Chinese investment restrictions by Donald Trump failed to alleviate deeper fears over Sino-US trade tensions and China』s economy.
The CSI 300 index, composed of major companies listed in Shanghai and Shenzhen, dropped 1.1 per cent to its worst close since May 2017. In a choppy trading day the index initially slumped as much as 1.1 per cent before edging higher to stand up 0.3 per cent by midday and then sinking again in the final session.
The moves came after Mr Trump dropped plans to impose new restrictions on Chinese investment in the US on Wednesday, bowing to pro-business advisers who warned it would damage the economy by chasing away foreign businesses.
However, the markets appeared to shrug off the measures with the sell-off resuming as worries of US tariffs on Chinese exports compounded existing investor concerns of credit tightening and middling Chinese economic data. At 3,442.6 the CSI 300 index is now down almost 22 per cent from its 2018 intraday high of 4,403.3, touched on January 26.
Other major Asia-Pacific bourses were mixed on Thursday, with gains for energy stocks after an oil price rally on Wednesday cushioning the impact of the sell-off in China. Heading into the close in Hong Kong the Hang Seng was up 0.3 per cent, while the Topix closed down 0.3 per cent and the S&P/ASX 200 in Sydney settled 0.3 per cent higher.
The renminbi continued to fall further to a fresh low for 2018, down 0.3 per cent on the day at Rmb6.6212 against the dollar, amid suggestions that China』s central bank was allowing it to weaken partly as a response to the simmering trade war with the US.