China Market falls 0.5%

The Mainland China equity market closed lower on Wednesday, 30 October 2019, as investors opted to take profits amid uncertainty over progress in US-China trade negations and caution ahead of several key central bank and economic data events. Market losses were, however, capped after Beijing vowed more opening-up A-share market. At closing bell, the benchmark Shanghai Composite Index declined 0.5%, or 14.85 points, to 2,939.32. The Shenzhen Composite Index, which tracks stocks on China's second exchange, lost 0.86%, or 14.07 points, to 1,628.62. The blue-chip CSI300 index dropped 0.49%, or 19 points, to 3,891.23.

Selloff in the local bourses triggered amidst uncertainty over U.S.-China trade deal progress after a U.S. administration official told that Washington and Beijing are continuing to work on an interim trade agreement, but it may not be completed in time for the leaders of the two countries to sign in Chile next month. Also, decline was fueled amid jitters ahead of the outcome of the U.S. Federal Reserve's policy-setting meeting later in the day. The U.S. central bank is largely expected to lower interest rates by 25 basis points. That would be the third time this year the Fed cuts rates. However, investors will also look for clues about the Fed's policy decisions in the future.

Market losses were, however, capped as continued flow of foreign money into the A-share market via the Stock Connect linking Hong Kong and the mainland after Beijing vowed more opening-up. China vice commerce minister said on Tuesday that Beijing will eliminate all restrictions on foreign investments not included in its self-styled negative lists, and also will neither explicitly nor implicitly force foreign investors and companies to transfer technologies. Technology transfers have been a major source of tension between China and the United States as both countries have been embroiled in a trade war for over a year.

CURRENCY NEWS: China's yuan was little changed against greenback on Wednesday, after the central bank firmer mid-point fixing. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0582 per dollar, 35 bps firmer than Tuesday's fix of 7.0617. In the spot market,the yuan was quoted at 7.0649 per U.S. dollar, 0.01% firmer than the previous close of 7.0656.

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