China Market extends losses ahead of official PMI data

The Mainland China equity market closed down after erasing gains during late afternoon on Friday, 30 August 2019, as profit taking triggered ahead of official factory activity data due on Saturday which is expected to contract for a fourth straight month in August. Market losses were, however, capped on signs of tentative easing in the trade dispute between the world's two largest economies after positive signals from Beijing on US-China trade. The industry group closed mixed, with losses in technology stocks overshadowed gains in consumer stocks. At closing bell, the benchmark Shanghai Composite Index declined 0.16%, or 4.68 points, to 2,886.24. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.74%, or 11.83 points, to 1,579.25. The blue-chip CSI300 index added 0.25%, or 9.40 points, to 3,799.25. For the month Shanghai Composite Index lost 1.6%.

Mainland market commenced trading in firm footing as signs of tentative easing in the trade dispute between the world's two largest economies provided some cheer to risk sentiment. Chinese commerce ministry spokesman Gao Feng said on Thursday that Beijing hopes Washington can cancel the planned tariff increase to avoid an escalation in the trade war. U.S. President Donald Trump said some discussions took place on Thursday, with more talks scheduled.

However, local market failed to hold early momentum, and ended in red on caution ahead of Factory activity data which is expected to contract for a fourth straight month in August.

Shares of technology firms declined, with Shenzhen Goodix Technology (603160 CH) the biggest loser, plunging 8.4% at 197.01 yuan. Shengyi Technology (600183 CH) dropped 6.2% to 24.36 yuan, Foxconn Industrial Internet (601138 CH) fell 1.11% to 14.21 yuan. China United Network (600050 CH) finished lower by 1.7% at 5.85 yuan.

Consumer-related stocks did well, particularly fiery liquor distillers, helped to limiting the losses. Distiller Kweichow Moutai (600519 CH) moved up 2.6% to 1,142 yuan, and Anhui Golden Seed Winery (600199) surged by the 10% daily limit to 6.78 yuan. In Shenzhen, Yuliangye Yibin (000858 CH) rose 3.3% to 141.5 yuan.

CURRENCY NEWS: China yuan declined against greenback on Friday, after softer mid-point fixing by central bank. Prior to market opening, the People's Bank of China set the midpoint at 7.0879 per dollar, 21 bps weaker than Thursday's fix of 7.0858 and the weakest since March 14, 2008.

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