FXStreet (Barcelona) – With the sell-off in Chinese stocks continuing, the action by the authorities to suspend trading in few stocks will only fuel further selling, according to Brown Brothers Harriman.
Key Quotes
“The sell-off in China continues with the Shanghai Composite down another 5.9%, ending the session just above the 200-day MA. Some 700 companies have suspended trading to “self-preserve.” Reports suggest that between suspended shares and those halted due to limit down, at one point today only 11% of all mainland shares were available to be traded.”
“By not allowing the market to find its natural level with these trading restrictions, we fear that the selling pressures will only grow stronger before finally erupting.”
“We also note that the CNY fixing is trending higher, and so is spot. But despite some (perfectly reasonable) chatter of capital outflows accelerating with the stock market sell-off, China’s FX markets have been relatively stable throughout.”
(Market News Provided by FXstreet)