China: Market falls on trade confusion and HK unrest

The Mainland China equity market closed down on Wednesday, 13 November 2019, as investors' sentiments hurt amid confusion over the extent of progress made in the first phase of an agreement between the U.S. and China after U.S. President Donald Trump threatened more tariff hikes on Chinese imports if talks aimed at ending a trade war fails. Meanwhile, market was jolted by an escalation in violence in five-month-old anti-government protests in Hong Kong. At closing bell, the benchmark Shanghai Composite Index declined 0.33%, or 9.58 points, to 2,905.24. The Shenzhen Composite Index, which tracks stocks on China's second exchange, edged up 0.01%, or 0.11 point, to 1,614.30. The blue-chip CSI300 index sank 0.09%, or 3.71 points, to 3,899.98.

Investors were in confusion over the extent of progress made in U.S.-China trade, President Donald Trump gave an update Tuesday on trade negotiations with China, saying both sides are close to a "phase-one" deal, but that he would only accept it if the agreement worked to the advantage of U.S. workers and businesses. U.S. President Donald Trump also threatened more tariff hikes on Chinese imports if talks aimed at ending a trade war fail to produce an interim agreement.

US-China is looking to hammer out the first phase of an agreement that would ease some tariffs but details of a potential deal remain in flux. The U.S. is pushing for more open markets and the elimination of intellectual property theft. China, for its part, wants Washington to drop some $250 billion in tariffs imposed since the trade war began.

Meanwhile, market movements in Hong Kong continue to be monitored, following an escalation in violence amid unrest in the embattled city. As anti-government protests rattled the city for a third straight day, transport, schools and many businesses closed for safety concerns. The protests began in June over a proposed extradition law and have grown to include demands for greater democracy and other grievances.

Shanghai Fengyuzhu Culture and Technology tumbled by the 10% daily limit to 14.81 yuan after the company said chairman and general manager Li Hui was detained Tuesday by the Beijing police for suspected collusion in tendering.

CURRENCY NEWS: China's yuan eased against greenback on Wednesday as the central bank set softer mid-point fixing, amid confusion over a preliminary trade deal between Beijing and Washington. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0026 per dollar, 38 pips or 0.05% weaker than the previous fix of 6.9988. Onshore spot yuan CNY=CFXS was changing hands at 7.0212, 139 pips or 0.2% weaker than the previous late session close.

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