Asia: Volatility persists as Chinese stocks reverse early losses

Chinese stocks reversed falls to close higher on Wednesday, while volatility saw other indices in the region fall.

The Shanghai Composite Index was up by 1.22%, after plunging as much as 5% earlier in the day, while the smaller Shenzhen Composite which had fallen by 5.3%, closed higher by 2.19%.

The start-up dominated ChiNext index was up by 2.66%.

The reversal raised eyebrows, and the Financial Times suggested while in other markets the movement would suggest investors had jumped in at lower valuations, China could be using one of its many arms to buy in.

On Tuesday, China said it injected almost $100bn from foreign exchange reserves into two policy banks to spur on the economy.

The early declines in Chinese markets spooked others around the region, Hong Kong’s Hang Seng closed down 1.43% to a nine month low.

Japan’s Nikkei 225 was down 1.61%, which also followed Chinese concerns. Japan’s July trade deficit widened more than expected to -¥268.1bn. The deficit was forecast at -¥53bn. The yen was at ¥ 124.21 to the dollar.

Elsewhere Australia’s ASX 200 was up by 1.4% off gains in banks and energy stocks. Westpac rose 3.32%, while ANZ rose 3% and National Australia Bank 2.58%.

In New Zealand shares rose by 0.7% as 22 stocks rose, 19 fell and the rest remained unchanged. The country’s largest electricity generator Meridian gained 2.7% while Fletcher Building and Precinct Properties New Zealand also advanced on positive results.