China Market gains on reopening optimism

Mainland China share market finished session modestly higher on Tuesday, 27 December 2022, as optimism over government decision to reopen its borders and abandon strict COVID-19 quarantine measures partially offset by weaker than expected industrial profits data.

At close of trade, the benchmark Shanghai Composite Index advanced 0.98%, or 30.01 points, to 3,095.57. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.88%, or 17.39 points, to 1,993.32. The blue-chip CSI300 index was up 1.15%, or 44.36 points, to 3,887.85.

Market gains was supported by news that China will stop requiring inbound travellers to go into quarantine starting from Jan. 8, representing a major step towards easing COVID curbs on its borders, which have been largely shut since 2020. China's health authority also said late on Monday that the country's management of COVID will be downgraded to the less strict Category B from the current top-level Category A.

However, market gains capped as the latest data showing profits at China's industrial firms contracted further in the January-November period, when strict COVID-related restrictions disrupted factory activity and supply chains.

ECONOMIC NEWS: China's Industrial profits fell 3.6% in January-November from a year earlier to 7.7 trillion yuan ($1.11 trillion), according to data released by the National Bureau of Statistics (NBS) on Tuesday. That compares with a 3% drop for January-October.

CURRENCY NEWS: The Chinese currency tad higher against the U.S. dollar on Tuesday, after China's central bank set a firmer midpoint rate. In the spot market, the onshore yuan CNY=CFXS rose as much 0.28% to a near two-week high of 6.9434 per dollar.

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