China Market falls on soft industrial profits, eyes on trade talks

The Mainland China equity market closed down on Monday, 29 July 2019, as risk sentiments weighed down by weaker than expected domestic industrial profit data for June 2019 and on caution ahead of the US-China trade talks this week. At closing bell the benchmark Shanghai Composite Index dropped 0.12%, or 3.53 points, to 2,941.01. The Shenzhen Composite Index, which tracks stocks on China's second exchange, sank 0.1%, or 1.49 points, to 1,574.95. The blue-chip CSI300 index shed 0.1%, or 4.30 points, to 3,854.27.

U.S.-China trade talks are set to resume this week, with a trade delegation from Washington scheduled to fly to China on Monday for negotiations with Beijing officials. Top US and Chinese negotiators will meet face-to-face meet in Shanghai on Tuesday for two days in the next round of negotiations aimed at de-escalating a tariff war between the two countries, three months after negotiations broke down. Neither side is signalling much hope for a breakthrough. Also, market expectations for any progress are low.

The governments of the world's largest economies have levied billions of dollars of tariffs on each other's imports, disrupting global supply chains and shaking financial markets in their dispute over how China does business with the rest of the world.

Corporate earnings will remain a focal point as investors remain vigilant of any signs a global economic slowdown is being reflected in companies' bottom lines.

All 25 STAR-listed firms posted gains, led by Beijing Worldia Diamond Tools, which surged the maximum allowed 20% to a record high.

Poultry-farming stocks rose, as chicken and egg prices have shot up. The wholesale price of eggs has risen 16.7% over the course of July, and has surged 44% from the low point seen in March. They were priced at 9.77 yuan per kilogram last Friday, according to latest figures from the Ministry of Agriculture and Rural Affairs. The wholesale price of chicken also rose to 20.11 yuan per kilogram, up 11% from a year ago, according to the China Good Agri-products Development and Service Association. Jiangsu Linhua Animal Husbandry (300761 CH) was up 6.4% to 60.03 yuan. Shandong Minhe Animal Husbandry (002234 CH) rose 6.1% to 35.59 yuan. Shandong Xiantan (002746 CH) was up almost 3% at 17.11 yuan. Shandong Yisheng Livestock & Poultry Breeding (002458 CH) rose 2.7% at 26.78 yuan.

ECONOMIC NEWS: Profits of China's major industrial firms fell 2.4% year on year in the first half of 2019, data from the National Bureau of Statistics (NBS) showed on Saturday. The decline quickened slightly from a fall of 2.3% in the January-May period. In June alone, profits of industrial firms dropped 3.1% from one year earlier to 601.92 billion yuan, following a 1.1% gain in May, according to the NBS.

CURRENCY NEWS: China yuan depreciated against greenback on Monday, after softer midpoint fixing by central bank and amid corporate dollar buying ahead of Sino-U.S. trade talks this week. Before the market open, the PBOC set the midpoint of the yuan's daily trading band at 6.8821 per dollar, 0.04% weaker than the previous fix of 6.8796. In the spot market, onshore yuan eased 0.19% to 6.8934 per dollar.

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