China Market falls 0.66% on worries about economic showdown

The Mainland China equity market declined to near two-and-half-year low on Thursday, 16 August 2018, as risk aversion selloff triggered amid worries about an economic showdown in China after downbeat economic data. However, the market losses were limited after China said it has accepted an invitation from the U.S. for a new round of trade talks to be held in late August. At closing bell, the benchmark Shanghai Composite Index declined 0.66%, or 18.07 points, to 2,705.19, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 1%, or 14.71 points, to 1,467.12. The blue-chip CSI300 index slipped 0.5%, or 15.25 points, to 3,276.73. So far this year, the Shanghai stock index was down 18.2%, while the CSI300 declined 18.7%.

China's Ministry of Commerce said that a Chinese delegation led by vice commerce minister Wang Shouwen will travel to the U.S. in late August for trade talks to be held with US Under Secretary of Treasury for International Affairs David Malpass.

Tencent (00700) said its profit for the six months ended June 2018 rose 26% year-on-year to RMB41,157 million. For the three months ended June 2018, the profit dropped 23% quarter-on-quarter and 2% year-on-year to RMB17,867 million. The revenue was up 30% year-on-year to RMB73,675 million.

An unexpected drop in profits for Chinese tech giant Tencent surprised investors and added to some recent concerns about the health of China's economy. Tencent, a gaming and messaging company, is the most valuable technology company in China. Earlier this week, reports on growth in factory output, consumer spending and retail sales in China were all slower than expected.

CURRENCY NEWS: China's yuan firmed against the dollar on Thursday, despite soft mid-point fixing by central bank, on signs of possible easing in tensions between Beijing and Washington as they agreed to hold trade talks late this month. The People's Bank of China (PBOC) weakened 90 basis points to 6.8946 against the U.S. dollar Thursday. In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2% from the central parity rate each trading day. The yuan was quoted at 6.8927 per U.S. dollar, 0.6% firmer than the previous close of 6.934.

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