Global sigh of relief for 113 hours without manic China markets

Bruce Yu needs a time out. Like investors around the world, the Franklin Templeton SinoAm money manager has struggled to keep up with escalating volatility in Chinese markets - swings that increasingly set the tone for trading in everything from commodities to US stocks and the Japanese yen. Luckily for Yu, China is shutting down its exchanges and banks until Monday to commemorate the 70th anniversary of Japan's World War II defeat. The holiday will give global investors 113 hours without any price swings or scheduled data releases from the world's second-largest economy.

"Most fund managers are battered and close to desperate" for relief from the turmoil, said Yu, who runs the Franklin Templeton SinoAm China A Shares Equity Fund in Taipei. The holiday "is a good time to clear your thoughts and prepare for what comes next. Hopefully global market volatility will drop."

China has rattled world markets over the past two months with a shock devaluation of the yuan, an opaque approach to stock-market intervention and a string of economic data signaling weak growth. The three biggest daily declines in the MSCI All-Country World Index over the past month were triggered in part by news out of China, according to data compiled by Bloomberg.

The MSCI All-Country World index sank 2.7 per cent on Tuesday after a gauge of Chinese manufacturing fell to a three- year low. An 8.5 per cent plunge by the Shanghai Composite on August 24 spurred the biggest drop in global shares since 2011. Emerging-market stocks and currencies tumbled last month in the wake of China's largest currency depreciation since 1994.

Price swings in the Shanghai Composite Index surged to the highest level since 1997 last month, while the Chicago Board Options Volatility Index - known as the VIX-jumped the most since at least 1990 in August. Swings in the Bloomberg Commodity Index over the past 30 days are near the highest in three years.

China's closure "will be a little bit of a circuit breaker," said Shane Oliver, a global strategist at AMP Capital Investors in Sydney, which oversees about $114 billion. "You've got the market shutdown and no data being released."

China's domestic stock markets closed at 3 pm Beijing time on Wednesday and won't reopen until 9:30 am on Monday. The yuan stopped trading at 4:30 pm in onshore markets. No major economic data is scheduled until Tuesday, when August trade figures will be announced.