'Traders are hunting': Chinese stocks are the latest to get caught in the crisis for emerging markets

(Harry Engels / Getty Images)
  • Stocks in China were sold heavily in Wednesday trade and closed just off their 2018 lows.
  • Emerging markets worldwide are under pressure as questions persist about Turkey’s future and the risk it could fall into a full balance of payments crisis.

SYDNEY — “Traders are hunting,” one fund manager told Business Insider this week after the plunge in the Turkish lira was followed by a sudden depreciation in the value of the South African rand.

On Wednesday in Asia, it was Chinese benchmark stocks that were caught in the sell-off of emerging market assets around the world.

The Shanghai Composite index finished more than 2% lower, after going into the lunch break down 1.33%.

It follows lingering concerns over US-Turkey tensions, after Turkish President Tayyip Erdogan announced a ban on imports of all US electronics overnight.

Shares in China are now hovering just above 2018 lows, and have lost more than 23% this year.

Investing.com

The tech-focused ChiNext index has been the worst performer, with falls of more than 2.53% on Wednesday.

Those falls have coincided with a sharp decline in Hong Kong-listed tech companies, led by internet giant Tencent Holdings.

A short time ago, Hong Kong’s Hang Seng index was down by around 1.6% for the session as Tencent fell by more than 3%.

It marks the third straight day of heavy falls for Tencent, the giant internet conglomerate which has now lost almost 10% this week after authorities in Beijing banned the sale of a new video game on mainland China.

In addition to the fall in stocks, China’s on-shore traded renminbi rose above 6.9 per US dollar, briefly hitting its lowest level since May 2017.

Data out of China today showed home prices across the 70 largest cities rose by 1.1% in July — the fastest pace since October 2016.

The increase came despite recent efforts by policy makers to curb excessive house price growth.

Reuters reports that gains in the 35 Tier-3 cities led the rally, outpacing gains in the 31 Tier-2 cities.

Markets are watching out for Indonesia’s central bank to make an announcement on interest rates.

A short time ago, the Indonesian rupiah was trading at 14,618 per US dollar, which is the lowest level since October 2015.

Both the rupiah and the Turkish lira have gained ground in early European trade, with the lira now back below 6 against the USD.

Following their overnight gains, US stocks futures are currently pointing around 0.1% lower.

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