Stocks slide, yuan rebounds

Hong Kong and Chinese stocks fell despite the 'father of emerging markets' Mark Mobius's upbeat remarks about the Chinese market and a yuan rebound spurred by a Chinese central bank comment that it will sell low-risk bonds including government bonds when necessary.

The Hang Seng Index fell 246 points, or 1.3 percent, to close at 18,230 on the heel of a selloff in the Wall Street as risk sentiments prevailed in light of US treasury yields approaching the year's high.

The Shanghai Composite Index lost 0.6 percent.

This slide came as Mobius said Chinese stocks were "looking good" and the recent rebound was a sign of confidence, reversing a call he made in April for investors to avoid them.

The 87-year-old money manager became bullish on Chinese equities three to four weeks ago, spotting a chance of recovery after the government rolled out measures to support the real estate sector.

That was "a light at the end of the tunnel," the co-founder of Mobius Capital Partners said at a media roundtable in Hong Kong yesterday.

In money markets, the onshore yuan edged up 32 basis points to close at 7.2455 per US dollar.

The rise came as traders said the People's Bank of China's comment on the possibility of selling government bonds raised the expectation of narrowing rate differential between the US and China.

It also came as some of China's regional authorities are guiding firms to slow purchases of foreign currencies, especially the US dollar, in a sign the nation is taking further measures to discourage capital outflows amid yuan weakness.

Meanwhile, the yen rebounded after crashing through a level that was believed to have caused Japan to act to prop up the currency. The yen gained 0.4 percent to 157 against the US dollar as of 5 pm in Tokyo after dropping to a four-week low of 157.71 late Wednesday.

In other news, Shanghai Fosun Pharmaceutical (2196) is eyeing a buyout of Hong Kong-listed Shanghai Henlius Biotech (2696), sources said.