China has lost its ranking as the world’s No. 2 stock market.
After a slump on Thursday, Chinese equities were worth US$6.09 trillion, compared with US$6.17 trillion in Japan, data compiled by Bloomberg showed.
The US has the world’s largest stock market at just more than US$31 trillion.
China’s stock market overtook Japan’s in late 2014, then soared to an all-time high of more than US$10 trillion in June 2015.
Chinese equities and the yuan have taken a beating this year amid a trade spat with the US, a government-led campaign to cut debt and a slowing economy.
“Losing the ranking to Japan is the damage caused by the trade war,” CEB International Investment Corp head of research Banny Lam (林樵基) said in Hong Kong. “The Japan equity gauge is relatively more stable around the current level, but China’s market cap has slumped from its peak this year.”
The Shanghai Composite Index has this year lost 17 percent to be among the world’s worst performers.
Industrial and tech stocks have been among China’s worst performers, with those subindices on the CSI 300 Index of large caps sliding more than 20 percent this year.
China’s Politburo, a body comprised of the Chinese Communist Party’s 25 most senior leaders, on Tuesday signaled that policymakers would focus more on supporting economic growth amid risks from the deleveraging campaign and the trade standoff.
Still, the Shanghai Composite Index suffered its worst week since early February.
“The market will likely continue to hover at low levels for the next couple of months,” First Shanghai Securities Ltd (第一上海證券) Hong Kong-based strategist Linus Yip (葉尚志) said. “But there’s still a chance that China’s stock market will recover with total capitalization ascending to the world’s No. 2 place again. After all, the economic fundamentals are still stable and growth momentum will resume after a short-term downturn.”
Losing the No. 2 ranking is a reminder that China’s role in global financial markets — while large — still does not match its economic might.
Policymakers have pledged to open areas such as investment limits on industries from banking to agriculture, but foreign ownership of equities and bonds remains low.
The yuan’s share of global payments in June fell to 1.81 percent, from 1.88 percent a month earlier, Society for Worldwide Interbank Financial Telecommunication data showed.
While Japan’s benchmark TOPIX has declined more than 4 percent this year, it remains one of the better-performing markets in Asia amid support from the Bank of Japan’s exchange-traded fund purchases and as most firms continue to report robust earnings growth.
Almost 60 percent of firms on the gauge that have reported in the current earnings season have beat analysts’ expectations.
The yuan has weakened more than 8 percent against the US dollar in the past six months, and there are few signs the People’s Bank of China has been intervening in the currency market.
China’s currency is in line for an eighth weekly retreat, the longest run since the start of the country’s modern foreign exchange rate regime in 1994.
The yuan’s tumble has prompted forecasters to lower their estimates for the exchange rate.
Deutsche Bank was among the latest to do so, cutting its year-end prediction to 6.95 yuan per US dollar from 6.8 on Wednesday, saying that trade tensions would likely put persistent pressure on China’s current account in the next few years.
The market value calculations only include primary listings to avoid double counting. Hong Kong’s equities are valued at US$5.1 trillion.
SECURITY CONCERNS: The Telecom Technology Center ran black-box tests for the Executive Yuan on devices and software from Chinese, US and South Korean firms Network devices from several Chinese manufacturers are insecure and allow personal information to be leaked, testing commissioned by the Executive Yuan has shown. A variety of devices and software, including apps, from Chinese, US and South Korean manufacturers that are used by government agencies at the central and local level were subjected to black-box testing — in which the functionality of an application is examined without knowing about its internal structure, an information-security official said yesterday on condition of anonymity. The Telecom Technology Center conducted the tests, which simulated cyberattacks, to determine their resilience to the attacks, the official said. The center
Americans awoke yesterday to charred and glass-strewn streets in dozens of cities after another night of unrest fueled by rage over the mistreatment of African Americans at the hands of police, who responded to the violence with tear gas and rubber bullets. Tens of thousands marched peacefully through streets to protest the death of George Floyd, a black man who died on Monday last week after a white Minneapolis police officer pressed his knee on his neck until he stopped breathing. However, many demonstrations sank into chaos as night fell: Vehicles and businesses were torched. The words “I can’t breathe” were
EXTRA INVITATIONS: Russia, Australia, South Korea and India would be asked to a later summit dedicated to countering China, Donald Trump said US President Donald Trump has been forced to cancel a planned face-to-face summit of G7 leaders this month and now wants to host an expanded meeting in September dedicated to countering China to which Russian President Vladimir Putin would be invited. Trump on Saturday announced that he had canceled the June meeting, which he had billed as a symbol of the US “transitioning back to greatness,” after German Chancellor Angela Merkel told him in a telephone call that she saw the summit in Washington as a health risk. Hundreds of security staff, journalists and officials also attend the two-day summits. Reports suggest
China would attack Taiwan if there is no other way of stopping it from becoming independent, Chinese General Li Zuocheng (李作成) said yesterday. Speaking at Beijing’s Great Hall of the People on the 15th anniversary of China’s “Anti-Secession” Law, Li, who is chief of the Joint Staff Department of the Chinese People’s Liberation Army Central Military Commission, left the door open to using force. The 2005 law is China’s legislative basis for military action against Taiwan. “If the possibility for peaceful reunification is lost, the people’s armed forces will, with the whole nation, including the people of Taiwan, take all necessary steps to