China Market falls 0.54%

The Mainland China equity market closed down on Thursday, 27 September 2018, as investor risk sentiments dampened after reports showing profit growth at China's large industrial companies slowed to a five-month low last month. Meanwhile, soft lead from offshore market overnight and weaker trade on other Asian market fuelled selloff. Market participants were unwilling to hold large positions for proprietary trade amid global market uncertainty and ahead of China's upcoming long public holiday. The week-long National Day holiday begins on Oct. 1. The benchmark Shanghai Composite Index declined 0.54%, or 15.04 points, to 2,791.78, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, lost 1.26%, or 18.24 points, to 1,429.61. The blue-chip CSI300 index fell 0.4%, or 13.65 points, to 3,403.59.

Industrial profits rose 9.2% in August to 519.69 billion yuan (US$76 billion), data from the National Bureau of Statistics (NBS) showed on Thursday. The pace of growth slowed for a fourth straight month and almost halved from the 16.2% gain in July. Profits at China's state-owned industrial firms rose 26.7% year-on-year in January-August versus a 30.5% increase in the first seven months. Last month's slowdown was mainly due to a double whammy of slower revenue and factory price gains, the statistics bureau said in a statement accompanying the data release. Demand for raw materials and industrial products has taken a hit this year as business expansion plans slowed, restrained by tighter funding due to China's multi-year campaign to curb corporate debt and crack down on risky borrowing. A softer property market has also sapped construction-related demand.

CURRENCY NEWS: China's yuan declined against the U.S. dollar on Thursday, inline with soft mid-point fixing by People Bank of China. Prior to market opening on Tuesday, the People's Bank of China (PBOC) set the midpoint rate at 6.8642 per dollar, 71 basis points weaker than Wednesday's fix of 6.8571. In the spot market, the yuan opened at 6.8789 and was changing hands at 6.8719 at midday, 72 pips firmer than the previous late session close.

OFFSHORE MARKET NEWS, US stock market closed down on Wednesday, after the Federal Reserve raised interest rates. The Fed raised its target overnight rate by 25-basis points to a range of 2% to 2.25%, up from 1.75% to 2%. The statement said the Fed still foresees another rate hike in December, three more next year, and one increase in 2020. The Dow Jones Industrial Average fell 106.93 points or 0.4% to 26,385.28, the Nasdaq dipped 17.10 points or 0.2% to 7,990.37 and the S&P 500 fell 9.59 points or 0.3% to 2,905.97.

The major European markets ended higher on Wednesday. The German DAX Index and the U.K.'s FTSE 100 Index both inched up by 0.1%, while the French CAC 40 Index climbed by 0.6%.

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