China Market falls for 4th day

Mainland China share market finished session lower Monday, 27 February 2023, extending losing streak for fourth trading day in row, pressured by contrasting U.S.-China economic fortunes, uncertainty over upcoming Chinese economic indicators and concerns over rising interest rates and a hawkish Federal Reserve.

At close of trade, the benchmark Shanghai Composite Index declined 0.28%, or 9.13 points, to 3,258.03. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.74%, or 15.77 points, to 2,124.88. The blue-chip CSI300 index dropped 0.42%, or 17.20 points, to 4,043.84.

Chinese stocks have largely reversed an early-2023 rally as middling economic data painted a mixed picture of a recovery, even as the country relaxed most anti-COVID restrictions earlier this year. While a recovery in China bodes well for the country's Asian trading partners, uncertainty over the timing of such a recovery has dented sentiment in recent weeks.

Investors will also closely monitor the February manufacturing data due on Wednesday for more clues on the pace of China's economic recovery since Beijing reopened its borders and ditched its rigorous anti-COVID rules in December.

ECONOMIC NEWS: The People's Bank of China maintained a moderately dovish tone in its quarterly report, reiterating its current stance was considered appropriate to support economic growth and stability. The central bank reiterated its support for a cross-cyclical adjustment to boost demand and provide stronger support for the economy. It also repeated its pledge to maintain sufficient liquidity and credit growth while keeping its money supply and social financing growth at a similar pace as its nominal gross domestic product. The PBOC added its required reserve ratio cuts last year were one of the tools the central bank used to support lending, without elaborating further.

CURRENCY NEWS: China's yuan declined against the dollar on Monday inline with softer mid-point fixing by China's central bank. Prior to market opening, the People's Bank of China (PBOC) set the yuan's midpoint rate CNY=PBOC at 6.9572 per dollar, 630 pips or 0.9% weaker than the previous fix of 6.8942. In the spot market, the onshore yuan was changing hands at 6.9734 by midday, 104 pips softer than the previous late session close, and the weakest level since Dec. 29, 2022.

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