News Digest

Billions wiped off value of shares as stock markets are ‘gripped by panic’

Shares have dived to new lows this morning, continuing stock market slides which plundered values worldwide last week. The Shanghai composite index tumbled 6.2% to 3,289.53 in early trading, having lost more than 10% so far this month. Hong Kong’s Hang Seng index fell 4.2%. Japan’s Nikkei 225 stock index dropped 2.5%, while Australia slid 2.5%. Stock markets in London, Paris and Frankfurt followed suit, opening sharply lower. The FTSE 100 index was down by 2.5% in early trade, while major markets in France and Germany also opened down by more than 3%. Takako Masai, the head of research at Shinsei Bank in Tokyo, said: “Markets are panicking. Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable.”

The market is in a downtrend. There’s no good news, stocks are still expensive, and there’s no fresh money coming in.

Analyst Qi Yifeng

The sell-off continued despite China’s latest attempts to reassure investors. At the weekend, Beijing said it planned to let its main state pension fund invest in the stock market. But even before the Chinese markets opened, stocks in Asia took a beating after fears of a China-led global economic slowdown drove US stocks to their steepest one-day drop in nearly four years on Friday. The FTSE 100 endured its worst week of trading of 2015, losing 5.5% by Friday. It meant that £93bn was wiped from the value of the index. The IMF has called the falls a “necessary adjustment”, while some experts said they were not just down to China’s economic slowdown. Sean Darby, chief global equity strategist at Jeffries, said: “A mix of disinflation and deflation forces, a tightening in global monetary conditions and deteriorating profits in emerging markets are much greater factors.”