Chinese markets dive on S&P downgrade; RMB hits new high vs dollar

Stock markets in mainland China and Hong Kong posted strong negative reactions yesterday to news that credit ratings agency Standard & Poor’s (part of McGraw-Hill, MHP.NYSE) had downgraded US debt, Reuters reported. A drastic drop in US markets and concerns about the debt crisis in Europe helped hammer Chinese markets. The Shanghai Composite Index was down 3.68% at close Monday, dragged down by losses in large-cap oil stocks. The Hang Seng Index in Hong Kong was down 4.04% to 20,100.2 by midday, its lowest level in a year. At the same time, the renminbi was allowed to further appreciate against the dollar to a new 17-year high, trading at 6.436 to the dollar at close. The currency briefly touched 6.425, its strongest level since the country unified its official and market exchange rates in 1993.