Stocks in China and Hong Kong Drop for the Second Day as yuan Slides Further

Stocks in China and Hong Kong Drop for the Second Day as yuan Slides FurtherAfter Tuesday, again on Wednesday for the continued second day the stocks in China dropped.  It fuelled concerns that money may flow out from the equity markets of the country into U.S. dollar assets.

On Wednesday, the Chinese yuan dropped to its four year low set off a rush in export-related stocks. However it gave a blow to the sectors which highly are dependent on raw materials and energy from overseas sources.

A fund manager of Bosera Asset Management, He Kai, suggested that the investors should increase U.S. dollar assets as according to him the Chinese currency is gradually expected to depreciate for a medium to long term stretch.

There was a0.4 percent drop in the CSI300 index and it slid to 4,052.19 points after the morning session. The Shanghai Composite Index also slipped 0.5 percent, to 3,910.30 points. Taking a hint from the slow moving markets globally and the mainland, even the Hong Kong stocks dropped.

Among some of the greatest losers were the real estate shares and the Chinese air carriers. The carriers dropped for the continued second day in China and Hong Kong both as the sector was downgraded by several of the analysts.

The only bright spot was the China-listed textile and garment makers which are mainly export centered.