China Market falls 1.7% amid Sino-US trade friction

The Mainland China equity market closed down on Wednesday, 05 September 2018, as investor appetite for riskier assets hurt by worries about China's economic health after growth in China's services sector weakened again in August and fears of a further escalation in the U.S.-China trade war. At closing bell, the benchmark Shanghai Composite Index dropped 1.68%, or 46.24 points, to 2,704.34, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 1.61%, or 23.53 points, to 1,442.25. The blue-chip CSI300 index declined 1.95%, or 65.76 points, to 3,298.14.

China's CSI300 index financial sector sub-index was lower by 1.45%, the consumer staples sector down 0.84%, the real estate index down 2.49% and the healthcare sub-index down 0.41%.

Markets have been fretting over Washington's next move in the Sino-American trade war, with a deadline for public comments on proposed U.S. tariffs on an additional $200 billion of imports from China ending on Thursday. U.S. President Donald Trump has said he will introduce the tariffs soon after. If implemented, the duties will be the third round of levies imposed by the Trump administration since July.

ECONOMIC NEWS: China Caixin services growth eases in August -- The services sector in China expanded at a slower pace in August. Caixin services sector growth score came in at 51.5, its 10-month low figure and down from 52.8 in July. The composite index fell to a five-month low of 52.0 in August from 52.3 in July.

CURRENCY NEWS: China's yuan was little changed against the U.S. dollar on Wednesday, as softer mid-point fixing by People Bank of China and threat of a major escalation in the Sino-U.S. trade. Prior to market opening on Wednesday, the People's Bank of China (PBOC) set the midpoint rate at 6.8266 per dollar, 83 pips weaker than the previous fix of 6.8183. In the spot market, the onshore yuan opened at 6.8264 per dollar and was changing hands at 6.8365 at midday, 85 pips firmer than the previous late session close. The offshore yuan was trading 0.20% weaker than the onshore spot at 6.8502 per dollar.

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