The RMB’s lower fix this morning continues to wreak havoc across all the financial markets. In Asia, equities were decimated following the fix, with the Nikkei Average closing down 1.6%, the Shanghai Composite tanking 1.1%, Shenzhen slipping 1.5%, the Hang Seng dropping 2.4%, while Singapore – a major China trading partner – saw its Straits Times Index slide a whopping 2.7%. Over in Europe, the FTSE 100 slid 1.1%, the CAC 40 dropped 1.7%, while the export-heavy DAX fell 2.3%. As for currencies, here’s a short list of the losers versus the dollar:
- Indonesian rupiah: – 1.3%
- Malaysian ringgit: – 1.4%
- Korean won: – 1%
- Brazilian real: – 1.1%
- Colombian peso: – 1.2%
The yuan itself is in the middle of a huge battle with the markets, with a new plunge protection team reportedly created just to sell dollars and clip the currency’s fall onshore. Onshore rmb fell 1.9%, while offshore it fared much worse, tanking almost 3%. Here’s what else you need to know:
Chinese July economic data misses estimates. China released a slew of disappointing data today, with retail sales rising 10.5% versus an expected 10.6% climb, industrial output growing at 6% versus a 6.6% forecast, and fixed-asset investment expanding 11.2% versus an 11.5% estimate. CNBC
German 2-year yields hit record low. With the world in risk-off mode thanks to China, investors are piling on German bunds and U.S. treasurys, sending the former’s yields to a record low of -0.288%. Daily Mail
Investors are worried about a Brexit. An NN Investment Partners survey says that three-fourths of international institutional investors think that a Brexit would have a negative effect on the Eurozone. Meanwhile, one in five of them believe it to be “extremely negative.” Financial Times (paywall)
Australian wage growth decelerates. Wages down under increased by just 2.27% year-on-year in June, 0.02% lower than the previous record low of 2.29%. Private sector wages meanwhile grew by just 2.2%, its lowest level on record. Public sector wages however climbed 2.5%, beating May’s 2.4% reading. Business Insider
Alibaba invests in micro loan start-up. The Chinese e-commerce giant just piled $200 million into Qufenqi, a micro loan start-up that allows students to pay for online purchases in installments. Alipay’s online payment unit along with the group’s Sesame credit-scoring service are apparently moving to help Qufenqi grow, perhaps into a unicorn. EJ Insight
Emerging market debt continues to pile up. JP Morgan says that emerging market business and household debt has climbed to an “enormous” 33% of GDP. As previously reported, some of these debts have seen their refinancing costs soar despite ultra-low interest rates, so this should be something to keep an eye on. Financial Times (paywall)
Brazil’s holds on to investment grade rating – barely. Ratings agency Moody’s just slashed Brazil’s credit rating from Baa2 to Baa3 – one notch above junk – and changed its outlook on the nation from stable to negative – dealing another blow to the already ailing country. Brazil’s “low susceptibility to event risk” however helped it keep an investment grade rating. WSJ
S&P places Buffett on notice. Standard and Poor’s apparently placed Berkshire Hathaway on “CreditWatch Negative,” citing the “uncertainty around the funding” over Buffett’s recent, $32 billion acquisition of Precision Castparts Corp. Business Insider
SEC charges nine for insider trading. Nine traders and computer hackers have been charged for trying to trade based on early access to press releases. Hackers broke into PRNewswire Association, Marketwired, and Business Wire to get corporate news releases before they went public. The case will bring together cyber theft and financial crime in a new twist on insider trading. WSJ
GE selling health-care lending unit. Capital One Financial will buy GE’s health-care lending business for about $9 billion. GE announced earlier this year that it wanted to narrow its operations, including the sale of most of GE Capital. WSJ
Died: Former Singapore OCBC Bank Chairman Lee Seng Wee. Lee served as the OCBC chairman from 1995 to 2003, working with the bank’s major acquisitions. Lee died Friday at age 85 after a fall. Straits Times
Meanwhile, in the lighter side of news:
Woman calls police over “unsweet” watermelon. And in order to get to the bottom of the case, the coppers purchased a watermelon off the same seller, and “found out it was truly not sweet.” People’s Daily
Photo: Jason Wesley Upton