China Market ends 0.18% up

The Mainland China equity market closed slight higher on Friday, 24 August 2018, due to bottom fishing on recently battered stocks and funds inflow. However, market gains were limited on growing trade war concerns after U.S.-China trade negotiations produced no breakthrough and on caution ahead of an address from Federal Reserve chairman Jerome Powell. At closing bell, the benchmark Shanghai Composite Index inclined 0.18%, or 4.81 points, to 2,729.43, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.23%, or 3.36 points, to 1,460.33. The blue-chip CSI300 index added 0.16%, or 5.30 points, to 3,325.33. For the week, Shanghai Composite Index gained 2.3 percent while the CSI300 was up 3 percent.

U.S. fund investors apparently saw a buying opportunity in China despite ongoing trade tensions, adding their most exposure to that market since January, Lipper data for the latest week showed on Thursday.

US and Chinese officials ended two days of talks on Thursday with no major breakthrough. Meanwhile their trade war escalated with activation of another round of duelling tariffs on US$16 billion worth of each country's goods.

U.S. Fed Chair Jerome Powell and other central bankers will meet at Jackson Hole later on Friday to discuss the root causes of stubbornly low inflation, slow wage growth and tepid productivity gains. U.S. President Donald Trump reiterated his displeasure with the Fed's rate hikes earlier this week and investors waited to see whether Powell would respond to such criticism.

CURRENCY NEWS: China's yuan slipped against the U.S. dollar on Friday, inline with soft mid-point fixing by central bank. Prior to the market opening, the People's Bank of China set the midpoint rate at 6.8710 per dollar, 343 pips or 0.5 percent weaker than the previous fix of 6.8367. In the spot market, the onshore yuan opened at 6.8735 per dollar and fell to a low of 6.8916 at one point, the weakest since Aug.17. As of midday, the spot yuan was changing hands at 6.8882 at midday, 133 pips weaker than the previous late session close and 0.25 percent softer than the midpoint.

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