China Market climbs 1.35%

The Mainland China equity market closed higher on Wednesday, 31 October 2018, as continued hunting for oversold stocks, with market sentiment bolstered by an announcement by China's securities regulator that it would guide more medium- and long-term capital into the market. Buying momentum amplified on expectations that Beijing will ease policy further to stabilise the economy after release of China's worse-than-expected reading for manufacturing activity for October. At closing bell, the benchmark Shanghai Composite Index added 1.35%, or 34.74 points, to 2,602.78, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 1.39%, or 17.77 points, to 1,94.22. The blue-chip CSI300 index grew 1.4%, or 43.56 points, to 3,153.82.

The China Securities Regulatory Commission said yesterday it would enhance the quality of listed companies, strengthen governance of listed firms, regulate information disclosure and improve transparency, encourage share buybacks and mergers and acquisitions by listed firms, according to a statement published on its official website. The commission also said that it will enhance market liquidity, reduce unnecessary interference in trading and provide investors with a fair chance to trade.

ECONOMIC NEWS: China's official manufacturing Purchasing Managers' Index (PMI)- produced by China's National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP) - was stood at 50.2 for October, down from 50.8 in September, and slightly above the 50-point mark that separates growth from contraction, as factory activity in the world's second largest economy slowed amid the ongoing US-China trade war. China's official PMI - produced by China's National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP) - is a better gauge of sentiment among larger, mostly state-owned enterprises, while the Caixin PMI to be released on Thursday is a better guide for smaller, mostly private sector firms.

CURRENCY NEWS: China's yuan depreciated against the U.S. dollar on Wednesday, after soft mid-point fixing by central bank and on signs that a trade war with the U.S. may escalate. Prior to market open, the People's Bank of China set the midpoint rate at 6.9646 per dollar, weakened by 72 basis points from 6.9711 mid-point set previous day. Wednesday's fixing was the weakest since May 20, 2008. The onshore yuan opened at 6.9639 per dollar and was changing hands at 6.9663 at midday, 12 pips firmer than the previous late session close.

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