China Market gains as easing COVID restriction

The Mainland China market finished session higher on Monday, 30 May 2022, on economic growth optimism as Shanghai inched closer to a planned end to a two-month coronavirus lockdown set for Wednesday.

At close of trade, the benchmark Shanghai Composite Index increased by 0.6%, or 18.82 points, to 3,149.06. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 1.07%, or 20.86 points, to 1,975.89. The blue-chip CSI300 index grew 0.69%, or 27.72 points, to 4,029.02.

The Beijing and Shanghai reopening narrative has boosted risk sentiment. Shanghai authorities is aiming to exit a two-month COVID lockdown conditions and will allow businesses to resume work from Wednesday, 1 June 2022, while Beijing reopened some parts of public transport on Sunday as well as some malls as infections stabilized. Strict movement restrictions in key Chinese cities have severely hit the nation's economy.

Risk appetite was also supported by stimulus measures announced by Shanghai authorities to support the economy. Shanghai, the country's commercial capital, announced tax breaks and subsidies to help businesses recover from a two-month shutdown.

CURRENCY NEWS: China's yuan strengthened against the U.S. dollar on Monday, despite weaker mid-point fixing by central bank and as the dollar drifted lower on easing domestic COVID-19 lockdowns and diminished expectations that rate rises by the U.S. Federal Reserve. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.7048 per dollar, 0.51% firmer than the previous fix of 6.7387. Spot market CNY=CFXS opened at 6.7053 per dollar and firmed to 6.6457, and was changing hands at 6.6536 late afternoon today, which was 0.67% firmer than Friday's late session close.

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