Stocks in China and Hong Kong fell on Wednesday as the Chinese yuan hit a fresh 5-1/2 year low against the dollar while worries about global growth and the long-run implications of Brexit hammered risky assets of all stripes.
China's yuan hit a fresh low against the dollar in early trade on Wednesday, after the central bank set its official midpoint at its lowest level since November 2010.
While the focus was on sterling, which reached a fresh 31-year trough early on Wednesday on Brexit anxiety, Beijing allowed the yuan to fall to the lowest since late 2010, which traders fear could signal an even steeper decline.
"Worries over Brexit have heightened and the sterling fell sharply," said Ben Kwong, chief operating officer of KGI Asia. "The weakening sterling is adding to depreciation pressure of the yuan, which has dragged Chinese shares both in Shanghai and Hong Kong."
The mainland's blue-chip CSI300 index .CSI300 fell 0.3 percent to 3,199.16 points by the lunch break, and the Shanghai Composite Index .SSEC slid 0.2 percent to 3,001.07.
"Risk-averse appetite is dominating global markets today, including Hong Kong shares," Kwong added.
Hong Kong's blue chip Hang Seng Index .HSI fell 1.9 percent to 20,359.35, and the China enterprises index .HSCE slid 2.1 percent. Both indices appeared on track for their biggest one-day percentage decline since June 24.
In China, sector performance was mixed with consumer stocks .CSI300CS gaining 2.1 percent, while resources .CSI300MT and healthcare .CSI300HC were up more than 1 percent. Banks .CSI300BI slid.
By: Reuters.
Reporting: Michelle Chen and Donny Kwok.
Editing: Richard Borsuk.
Photo: Financial Express.
Review: Emerging Market Formulations &
Research Unit, FLAGSHIP RECORDS.
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