China Market extends gain

Headline indices of the Mainland China equity market gained further ground, settling near 6-1/2-month highs on Monday, 18 March 2019, with investor sentiment brightened by report about substantial progress in U.S.-China trade negotiations as well as indications of more Chinese economic stimulus. At closing bell, the benchmark Shanghai Composite Index advanced 2.47%, or 74.67 points, to 3,096.42. The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 2.71%, or 44.42 points, to 1,685.79. The blue-chip CSI300 index climbed 2.85%, or 4106.75 points, to 3,851.75.

The Chinese government has additional monetary policy measures that it can take to support economic growth this year, and will even cut "its own flesh" to help finance large-scale tax cuts, Premier Li Keqiang said on Friday. Li's comments suggest Beijing is ready to roll out more stimulus measures to ensure the economy grows within a targeted range of 6-6.5%.

On the trade front, top officials from the world's biggest economies working on an agreement to end their long-running tariffs spat, which was a major drag on markets at the end of 2018. While there are few details on the talks as they stand - and a floated summit between Donald Trump and Xi Jinping looks to be later than expected - upbeat comments from both sides are keeping investors broadly happy for now.

Shanghai's stock exchange, which was ordered by Chinese President Xi Jinping in November to open a new board for technology start-ups, will accept submissions for initial public offerings from Monday, according to Beijing-based media group Caixin.

Sentiment was also buoyed by traders ramping up buying of companies that are expected to report solid first-quarter earnings. A total of 371 mainland China companies will release their earnings this week, according to data compiled by Bloomberg.

Shares of consumer firms led the advance on the mainland, as companies are widely seen as beneficiary of Beijing's measures to boost domestic consumption. Kweichow Moutai rose 4.2% to a record 810.09 yuan, taking its market capitalisation past 1 trillion yuan (US$149 billion). Anhui Golden Seed Winery jumped by the 10% daily limit to 6.48 yuan. Luzhou Laojiao surged by 10% to 58.60 yuan and Wuliangye Yibin rallied by the same margin to 86.66 yuan.

Companies linked to electronic cigarettes tumbled after China's central television said in an annual consumer day gala show on Friday night that the product was detrimental to consumers' health. Shanghai Shunho New Materials Technology, which sells electronic cigarettes through a controlled unit, tumbled by 7.8% to 11.54 yuan. Shantou Dongfeng Printing, a maker of cigarette packaging materials, fell 0.6% to 10.55 yuan.

CURRENCY NEWS: China's yuan rose against the U.S. dollar on Monday, on the back of firmer mid-point fixing by central bank and as further signs of receding economic momentum in the United States suggested the Federal Reserve could take a distinctly dovish turn at its meeting later this week. Prior to market opening on Monday, the People's Bank of China (PBOC) set the midpoint rate at 6.7088 per dollar, 79 pips or 0.12 percent firmer than the previous fix of 6.7167. In the spot market, the onshore yuan opened at 6.7142 per dollar and was changing hands at 6.7122 at midday, 18 pips firmer than the previous late session close.

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