China Market falls on COVID-19 woes

The Mainland China share market finished session lower on Friday, 26 November 2021, as risk aversion selloff triggered on fears of new and possibly vaccine-resistant coronavirus variant, with semiconductor-related and energy shares leading the drop.

At close of trade, the benchmark Shanghai Composite Index dropped 0.56%, or 20.09 points, to 3,564.09. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.2%, or 5.07 points, to 2,507.15. The blue-chip CSI300 index was down 0.74%, or 36.31 points, to 4,860.13. For the week, the CSI300 index shed 0.6%, while the Shanghai Composite Index edged up 0.1%.

Sellers were mobilised after the World Health Organization highlighted concerns with respect to the South African strain of the Covid 19 virus with a large number of mutations. The new variant has prompted some countries including the UK to suspend flights from South Africa and some of its neighbouring nations. Elsewhere, Shanghai, China's biggest commercial city, reported three new Covid-19 infections on Thursday.

Shares of consumer staples and travel related companies declined as a handful of local Covid-19 cases in eastern parts of China prompted Shanghai city to limit tourism activities and a nearby city to cut public transportation services.

CURRENCY NEWS: China's yuan slipped against the U.S. dollar on Friday, despite firmer mid-point fixing, pressured by worries about the new South African Covid variant, although continued year-end corporate demand for the local currency capped losses. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.3936 per dollar, 44 pips firmer than the previous fix of 6.3980. In the spot market, the onshore yuan CNY=CFXS was changing hands at 6.3917 at midday, 54 pips weaker than the previous late session close.

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