Updated throughout the day
January 20, 2016, 7:30 p.m. HKT
Asian markets plunged on Wednesday, dragged down by escalating poor sentiment about China, global growth, and oil and other commodity prices. Japan and Hong Kong led the way lower, and the Australian benchmark index closed at its lowest level since July 2003. Markets in Japan entered bear territory — defined as a drop of at least 20% from a recent peak. The Nikkei 225 and Topix have been 21% lower than summer peaks, and both indices fell about 3.7% on Wednesday as the shares of export-earners were dumped as the yen rose. The Shanghai Composite index was down 1.03% at 2,976.69 at market close, while the Shenzhen Composite index fell 1.03% to 1,876.31. European stock markets took their lead from Asia and opened with heavy losses.
The bearish story for stocks seems firmly entrenched. Relief rallies on occasional good news are far outweighed by negative sentiment on oil and the outlook for the Chinese economy.
Here’s what else you need to know:
Oil tumbles below $28, setting yet another 12-year low. The fundamentals are looking bad for prices. The IEA said on Tuesday that the oil market to remain oversupplied until late 2016 as warm weather and ramped up Iranian production will check demand. Reuters
Hang Seng cascades below 19,000 and HK dollar hits 2007 low. Wednesday’s losses totalled 3.9% in heavy volumes with property developers in the vanguard. The close: 18,886.30. The pegged currency fell to HK$7.8229 versus the U.S. dollar, close to the weak end of its permitted band and near to its lowest level since 2007, as investors continued to withdraw funds on anxieties about China’s prospects.
China stresses transition to service-based economy as GDP growth falls to 6.9%. China’s statistics bureau emphasized that for the first time services accounted for more than half of the economy, climbing to 50.5% from 48.1% the year before. Some analysts argue that shift simply reflects a downturn in traditional heavy industry. The Wall Street Journal (paywall)
Shell profit tumbles amid oil price slump. Royal Dutch Shell saw its profit fall by as much as 50% in the fourth quarter, illustrating how the slump in oil prices is playing havoc with the performance of the oil group as it tries to take over BG Group. The Wall Street Journal (paywall)
IMF cuts world growth forecasts for the next two years. The Washington-based fund said the global economy would expand 3.4% this year and 3.6% in 2017, both 20 basis points lower than its previous prediction made three months ago. It repeated that central banks should continue to boost growth and that finance ministries should bolster investment spending, warning that economic recovery remains fragile. WBP Online
Global unemployment set to rise. The number of jobless people in the world is set to rise this year, as problems in emerging markets prevent the global unemployment rate from returning to pre-crisis levels, according to the International Labour Organisation, a United Nations agency. Financial Times
Former Xinjiang party chief jailed for corruption. A former Communist Party chief in China’s Xinjiang region has been jailed for 12 years for corruption, state media report.
Yang Gang was party secretary in the autonomous region’s capital, Urumqi, from 1999 to 2006. BBC
Palin backs Trump for US President. Former Alaska governor Sarah Palin has endorsed Donald Trump’s presidential bid. She was the vice-presidential nominee on Republican John McCain’s unsuccessful run in 2008. BBC
China’s Meituan-Dianping raises $3.3 billion. The leading online seller of movie tickets and restaurant bookings achieved the largest private fundraising round globally for a venture-capital-backed startup. Investors in the company valued at $18 billion include Chinese internet firm Tencent, venture-capital firm DST Global and Singapore state investment firm Temasek. The Wall Street Journal (paywall)
Swede activist makes ‘confession’ on China state TV. Detained Swedish rights activist Peter Dahlin has appeared on Chinese state television apparently confessing to breaking the law through his group’s activities. He has been held since early January amid a crackdown on human rights lawyers and activists. BBC
CIMB slashes 32 jobs in Hong Kong. Kuala Lumpur-based CIMB has laid off 32 investment banking and sales and trading employees on Friday, describing the cuts as part of its three-year program to rebuild earnings growth. Finance Asia (paywall)
HKMA head Norman Chan vows to defend Hong Kong peg with $423 billion war chest. The head of the Hong Kong Monetary Authority has vowed to defend the 32-year-old Hong Kong dollar peg even though it is facing up to US$130 billion of capital outflows due to last month’s U.S. interest rate rise and the weak local economy. South China Morning Post (paywall)
Amazon registers Chinese subsidiary for first foray into $350 billion maritime shipping market. Adding to its already vast arsenal of logistical operations, the company confirmed it had registered with the U.S. Federal Maritime Commission to operate via a Chinese subsidiary Beijing Century Joyo Courier Service. South China Morning Post (paywall)
IS confirms “Jihadi John” is dead. The terrorist group published an obituary for the British jihadist, whose real name was Mohammed Emwazi, in its online magazine Dabiq. In November the US military said it was “reasonably certain” it had killed him in a drone attack. Emwazi appeared in several beheading videos. BBC
You won’t believe this…
World’s oldest man dies in Japan at 112. Yasutaro Koide, born on 13 March 1903, was named the oldest man by Guinness World Records last August. He was quoted as saying his secret to long life was not smoking or drinking, not to overdo things and to “live with joy”. BBC
Photo: Denise Chan