File photo provided by the Shanghai Stock Exchange (SSE) shows an outside view of the SSE in Shanghai, east China. (PHOTO / XINHUA)
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The CSI 300 Index dropped as much as 9.1 percent as onshore financial markets opened for the first time since Jan 23. China’s benchmark iron ore contract fell by its daily limit of 8 percent, while copper, crude and palm oil also sank by the maximum allowed. The yield on China’s most actively traded 10-year government bonds dropped the most since 2014. The yuan weakened 0.8 percent to the cusp of 7 per dollar.
China injected cash into the financial system Monday, with the central bank seeking to ensure ample liquidity as markets plunge. It cut the rates on the funds by 10 basis points. Officials also urged investors to evaluate objectively the impact of the coronavirus.
The CSI 300 pared some losses to trade 7 percent lower at 9:57 a.m. in Shanghai. Declines were led by telecom, technology and commodity producers. Hong Kong’s Hang Seng Index, which dropped 5.9 percent in three days of trading last week, rose 0.6 percent.
The People’s Bank of China added 900 billion yuan (US$129 billion) of funds with seven-day reverse repurchase agreements at 2.4%. It will also inject 300 billion yuan with 14-day contracts at 2.55%. While the total is the largest single-day addition of its kind in data going back to 2004, it implies a net injection of just 150 billion yuan as more than 1 trillion yuan of short-term funds mature.
HONG KONG NEWS