The global stock markets suffered another selloff today after China automatically suspended its stock circuit breaker when the Shanghai Shenzhen CSI 300 Index dropped nearly 7%.
Investors around the world are worried about the China’s slowing economic growth and its currency devaluation. Bloomberg reported that China’s securities regulator conducted an emergency meeting regarding its stock market volatility, but failed to make a policy decision.
Sabrepoint Capital Is Shorting SPACs For 2021
Sabrepoint Capital Partners was up 16.18% for the fourth quarter, bringing its full-year return to 27.49% for 2020. The S&P 500 Total Return Index gained 17.4% during the year. The fund with $300 million in assets under management reports that its long positions contributed 55.2% to its 2020 return, while its shorts subtracted 16.7%. Q4 Read More
According to Bernard Aw, a strategist at IG Asia Pte in Singapore, the China Securities Regulatory Commission (CSRC) is probably discussing the effectiveness of its current threshold levels. He said, “They may consider widening the thresholds given the higher volatility in the Chinese equity markets.”
The People’s Bank of China (PBOC) reduced its yuan reference rate yesterday, which caused the CSI 300 Index to decline 7.2% yesterday. The Chinese central bank is now considering new measures to prevent high volatility in the exchange rate and will continue its intervention in the currency market, according to people familiar with the situation.
Hugh Young, a managing director at Aberdeen Asset Management, commented that the PBOC’s intervention is counterproductive. He said, “Often, the more measures the government takes, the more it encourages people to go against it. They should regulate the market to make sure rules are clear, and people abide by the rules. They shouldn’t worry as stock prices go up or down.”
Separately, Peter Kenny, an independent market strategist wrote in a note to investors that the movements of the markets have been extreme. However, those moves do not yet suggest running for the exits. He maintains optimistic on the markets.
Kenny explained, “My optimism rests on two pillars: Domestic economic data and the prospects for better-than-expected corporate earnings. I expect a roughly 6% gain by the S&P 500 this year. I also expected an 8% increase in corporate revenues.”
- Dow Jones Industrial Average (DJIA) – 16, 514.10 (-2.32%)
- S&P 500- 1,943.09 (-2.37%)
- NASDAQ- 4,689.43 (-3.03%)
- Russell 2000- 1,064.55 (-2.72%)
- EURO STOXX 50 Price EUR- 3,084.68 (-1.74%)
- FTSE 100 Index- 5,945.08 (-1.96%)
- Deutsche Borse AG German Stock Index DAX- 9,979.85 (-2.29%)
- Nikkei 225- 17,767.34 (-2.33%)
- Hong Kong Hang Seng Index- 20,333.34 (-3.09%)
- Shanghai Shenzhen CSI 300 Index- 3,294.38 (-6.93%)
Stocks in Focus
Apple ended today’s trading below $100. The stock price of the company fell more than 4% to $96.45 per share. Investors are spooked by the declining iPhone demand and China’s economic slowdown.
The shares of Gap closed $26.74 each, up by more than 5%. However, the stock price of the company tanked more than 7% to $24.74 per share during the extended trading around 4:28 in the afternoon. Gap reported a 4% decline in net sales to $2.01 billion for the five-week ended January 2, 2016.
The stock price of Sunedison plummeted nearly 40% to $3.33 per share. The photovoltaic energy solutions company was negatively impacted by its announcement regarding measures to reduce its debt on the balance sheet. The company is offering a new $725 million second lien secured loan at an interest rate of LIBOR plus 10%. The company also entered into a series of exchange agreements with certain holders of its convertible senior notes due 2018, 2010, 2022, and 2025.