China Market rises 0.62%

The Mainland China equity market closed higher on Monday, 18 November 2019, as optimism gradually returned on prospects of a Sino-U.S. trade dealafter U.S. and Chinese officials sounded more positive. Meanwhile, buying momentum underpinned after the People's Bank of China lowered borrowing costs on short-term loans and injected $26 billion into the financial system. At closing bell, the benchmark Shanghai Composite Index inclined 0.62%, or 17.86 points, to 2,909.20. The Shenzhen Composite Index, which tracks stocks on China's second exchange, was up 0.72%, or 11.49 points, to 1,617.19. The blue-chip CSI300 index added 0.8%, or 30.84 points, to 3,907.93.

Optimism gradually returned after report that the two sides had "constructive talks" on trade on Saturday that included Vice Premier Liu He, U.S. trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. That came after White House economic advisor Larry Kudlow said late last week the two economic powerhouses were getting close to a deal.

The People's Bank of China unexpectedly trimmed a key interbank lending rate on Monday, the first easing in the liquidity tool in more than four years and injected $26 billion into the financial system and a signal to markets that policymakers are ready to act to prop up slowing growth. The moves were seen as aimed at shoring up confidence following a string of poor economic data. Meantime, Hong Kong remains a focus as violent clashes between police and protesters showed no signs of abating.

CURRENCY NEWS: China's yuan eased against greenback on Monday, in spite of central bank set firmer mid-point fixing. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0037 per dollar, 54 bps or 0.08% firmer than the previous fix of 7.0091. In the spot market, onshore yuan CNY=CFXS opened at 7.0150 per dollar and was changing hands at 7.0107 at midday, 35 pbpsips weaker than late session close.

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