Stocks encounter 'Black Monday', down 100 points

(People's Daily Online)

15:46, August 08, 2011

China's stock markets encountered a "Black Monday" bout, as the Shanghai composite stock index fell by nearly 100 points, as investors were unnerved by the first-ever downgrade of U.S. government credit.

Investors stampeded to sell off their holdings shortly after the markets were opening in the morning. Their fear of a global economy worsening because of the dual fiscal troubles in the United States and Europe is thickening.

Despite Obama administration’s strong unhappiness and disapproval, the independent rating agency, the Standard and Poor’s, unexpectedly cut the American sovereign credit rating from triple AAA to AA+ over the weekend, immediately throwing the global markets to a tumult.

The Shanghai composite index, tracking the bigger of China's two markets, dropped 99.61 points, or 3.79 percent on Monday on a turnover of 117.5 billion yuan. The smaller Shenzhen market lost 3.3 percent.

Among the major Asian markets, Hong Kong's Hang Seng index tumbled 3.8 percent to 20,145.82 and South Korea's Kospi was down 3.8 percent to 1,869.45 after briefly diving nearly 7 percent. Japan's Nikkei 225 stock average dropped 2.2 percent to 9,097.56.

Oil prices extended recent sharp losses, trading below $84 a barrel on expectations that weaker global growth will crimp demand for crude. The dollar was lower against the yen and the euro.

Amid the credit downgrade by the Standard & Poor's, the U.S. dollar weakened in the markets against euro and yen. China’s currency, the Renminbi, strengthened by more than 100 basic points against the greenback on Monday.

The People's Bank of China, the central bank, set the official medium trading price of Renminbi at 6.4305 yuan against one U.S. dollar, a record high since China initiated its currency value formation reform plan in July 2005. The Renminbi has risen about 2.9 percent against the dollar this year.

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