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maltatoday, WEDNESDAY, 6 JANUARY 2016 11 Business Today www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way Market commentary: Stocks drop across the globe amid concerns on China This morning news emerged that China moved to support its sinking stock market as state-controlled funds bought equities. The securi- ties regulator also signalled that a selling ban on major investors will remain beyond this week's expira- tion date according to mainstream sources. The move came after a 7% tumble in the CSI 300 Index on Monday triggered a market-wide trading halt. It is reported that the China Securities Regulatory Commission asked bourses verbally to tell listed companies that the six-month sales ban on major stockholders will remain valid beyond 8 January. Chinese policy makers, who took unprecedented measures to prop up stocks during a summer crash, are stepping in once again to combat a rout that erased $590 billion of value in the worst- ever start to a year for the nation's equity market. In today's session China's CSI 300 index rose 0.3 percent at the close, after earlier falling more than 2 percent. The plunge on Monday triggered the nation's circuit breakers on their first day in effect, dealing a blow to regulatory efforts to calm one of the world's most volatile bourses. Authorities are trying to prevent market turmoil from eroding confidence in an economy set to grow at its weakest annual pace since 1990. State funds were controversially used to prop up shares as the CSI 300 plunged as much as 43 percent over the summer. State funds probably spent $236 billion on equities in the three months through August, according to Goldman Sachs. China also took steps to ease borrowing costs and support the yuan today with the central bank conducting the biggest reverse- repurchase operations since September, adding funds to the financial system to keep a lid on money-market rates. Geopolitical concerns between Saudi Arabia and Iran did little to help temper the negative tone as did some much softer than expected manufacturing data out of the US. The end result was some hefty falls across the globe. The Stoxx 600 closed down -2.50% - its worst start to a year ever - while the DAX was down -4.28% for its worst fall since late August. The S&P 500 (-1.53%) managed to recover about a percent into the close but still suffered its worst start to a year since 2001 and the sixth-worst ever. The distinctly risk-off start to the year saw a decent bid fuel across core Government bond markets. 10y Treasury yields finished the session down 2.7bps at 2.243% although did temper a move lower of as much 7bps mid-way through the session. 10y Bund yields were down over 6bps and are sitting around 0.565% as well as peripheral countries including Italy and Spain which are now trading 1.518% and 1.684% respectively. Much like the equity moves, credit markets were hard hit also with Crossover nearly 19bps wider and CDX IG over 2bps wider in the US. Gold rallied +1.23% while Oil finished - 0.76% lower and below $37, in a session dominated by volatility related to the tensions in the Middle East. This article was issued by Simon Psaila, Treasury Officer at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, views and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing in this article. Eurozone infl ation remains at 0.2% in December Infl ation in the eurozone re- mained at 0.2% in December, un- changed from November, offi cial statistics show. Price growth in food, alcohol and tobacco slowed slightly compared with November, while the drop in energy prices was also smaller, according to Eurostat estimates. The rate was lower than the 0.3% rise expected by economists. The data will put pressure on the European Central Bank to act further to boost the struggling European economy. The central bank disappointed market hopes last month with its attempts to revive the economy, which were less dramatic than analysts had expected. The inflation figures are an early, flash estimate from Eurostat and so are not broken down by member states. It does give broad indications of which groups of products have gone up or down. Food, alcohol and tobacco prices were estimated to be rising 1.2% year-on-year in December, compared with 1.5% in November. Energy prices were falling an annual 5.9%, compared with 7.3% a month earlier. And the price of services was up 1.1%, compared with 1.2% the month before. China battles to shore up stocks after yuan tumble China struggled to shore up shaky sentiment on Tuesday a day after its stock indexes and yuan cur- rency tumbled, rattling markets worldwide, but analysts warned investors to buckle up for more wild price swings in the months ahead. Stocks fell more than 2 percent in early trade, prompting fears that exchanges were set for a second day of panic selling after a 7 percent dive on Monday set off a new "circuit b r e a k e r " m e c h a n i s m , s u s p e n d i n g trade nation- wide for the first time. But both the central bank and the stock regulator reacted quickly, and major indexes recouped most of their initial losses despite a late afternoon scare. The People's Bank of China (PBOC) poured nearly $20 billion into money markets, its largest cash injection since September, and traders suspected it was using state banks to prop up the yuan at the same time. The China Securities Regulatory Commission (CSRC), for its part, announced it was planning new rules to further restrict share sales by major stakeholders in listed companies, and said it would further tweak the circuit breaker mechanism amid criticism that it had fueled Monday's sell-off. The blue-chip CSI300 index ended up 0.3 percent at 3,478.78 points after bouncing in a 4 percent range, while the Shanghai Composite Index .SSEC dipped 0.3 percent to 3,287.71 points. How long any reprieve will last is still in question. In a d i l e m m a similar to the U.S. Federal Reserve's recent tapering of its stimulus program, Beijing is trying to orderly unwind a massive and unprecedented stock market rescue last summer, while pressing ahead with reforms to allow markets to have a greater say in determining the yuan's value. Its heavy handed approach to the stock market crash and its surprise devaluation of the yuan in August had called its policymaking into question and sparked global market volatility.