China

Signs are emerging that Chinese property investments abroad will maintain their torrid pace despite the market turmoil, as wealthy individuals and well-heeled companies seek to shelter their money in more stable havens abroad. In Australia, where China earlier this year topped the U.S. as the biggest source of foreign real-estate investment, officials are worried that wealthy Chinese investors will pour more money into an already overheated Australian property market.

Boom times for luxury in China are largely over, after the recent stock market rout and currency devaluation, compounded by an already slowing economy and a government crackdown on lavish gift-giving, the International New York Times reported. The effect of those woes on Chinese shoppers — who make up as much as a third of global spending on high-end goods — has rattled both investors and global luxury brands.

China’s central bank on Tuesday cut its benchmark interest rate and freed banks to lend more, the latest signs of the government’s growing distress over slumping stocks and slowing economic growth, the International New York Times reported. The central bank’s action followed a global stock market rout in which China led the declines. The main Shanghai share index plunged an additional 7.6 percent on Tuesday, to its lowest level this year.

The China-led turmoil that has rocked global markets in the past two weeks has also shaken the ruling Communist party and left Li Keqiang, the prime minister, fighting for his political future, according to analysts and people familiar with the internal workings of the party. Among party officials and politically connected people in Beijing, the hottest topic of conversation is whether Mr Li will take the fall for Beijing’s perceived mismanagement of the stock market crash and the country’s broader economic slowdown.

After spending about $200bn buying shares to prop up falling equity prices over the past seven weeks, Beijing capitulated to market forces on Monday by choosing not to intervene as the benchmark Shanghai Composite Index fell 8.5 per cent, the Financial Times reported. The fall was the worst since February 2007. But unlike on most other days since the government launched an unprecedented effort to reverse plunging equities last month, the “national team” of state-owned stock buyers did not jump in to support the market.

The People’s Bank of China is preparing to flood the banking system with liquidity to boost lending, according to officials and advisers to the central bank, as its recent currency moves are squeezing yuan funds out of the market and renewing concerns over capital leaving Chinese shores, The Wall Street Journal reported.

The Bank of Portugal is in exclusive talks with China's Anbang Insurance Group Co on the sale of state-rescued Novo Banco, leaving two other bidders on the sidelines, sources said. Two sources close to the bidding process told Reuters China's Fosun International and U.S. fund Apollo Global Management had also made binding bids and could re-enter the race if talks with privately-held Anbang fail. A Beijing-based spokeswoman for Anbang declined to comment.

Chinese stock markets took a wild ride on Wednesday, tumbling and soaring in a session that made little sense other than to highlight that investors have almost no faith in a month-long government effort to stabilize them, the International New York Times reported. The Shanghai and Shenzhen markets fell 3 percent in morning trade, taking their losses to more than 8 percent since investors stampeded without warning on Tuesday. But state-backed buyers later rushed in, enabling stocks to finish the day more than 1 percent higher.

The shock waves from China’s surprise yuan devaluation are ricocheting through African economies, sending currencies tumbling and stoking anxiety that the continent’s biggest trading partner might be losing its appetite for everything from oil to wine, The Wall Street Journal reported. In South Africa, the rand hit a 14-year low of 12.94 to the dollar on Monday, extending a 2% drop since Aug. 10 and a 12% slide this year.

If finance were a boxing match, then the referee would be getting ready to intervene in emerging markets, the Financial Times reported. Already on the back foot because of fears over tighter US monetary policy, and taking a pounding from sliding commodity prices, the developing world’s stocks, bonds and currencies have just been on the receiving end of a haymaker from China — in the form of its modest but ominous devaluation. The rout has been fierce and broad.