China Market rises on additional stimulus hopes

Mainland China equity market finished session higher on Friday, 14 February 2020, on expectations of additional stimulus out of Beijing and eventual success in defeating the novel coronavirus. At closing bell, the benchmark Shanghai Composite Index advanced 0.38%, or 10.94 points, to 2,917.01. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.44%, or 7.82 points, to 1,779.43. The blue-chip CSI300 index was up 0.7%, or 27.81 points, to 3,987.73.

China's central bank has injected 1.7 trillion yuan liquidity into its banking system and issued various policies to increase loans, especially for small and medium-sized enterprises hit hard by the coronavirus. Government advisers are circulating ideas in Beijing to further cut interest rates and allow the fiscal deficit ratio to exceed the 3% level.

The PBOC has vowed it will use tools to support key sectors, having already pumped billions of dollars into the money market to stabilise confidence.

Investors continued to watch for developments on the coronavirus outbreak following Thursday's spike in the number of cases reported after Hubei changed the way cases are diagnosed. China's National Health Commission said it had recorded 121 new deaths and 5,090 new coronavirus cases on the mainland on Thursday, taking the accumulated total infected to 63,851 people.

CURRENCY NEWS: China's yuan edged down against the dollar on Friday, reflecting slight strength in the greenback overseas and continued investor worries over the economic fallout from the coronavirus epidemic. Prior to the market opening on Friday, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.9843 per dollar, 58 pips or 0.08% weaker than the previous fix of 6.9785. In the spot market, onshore yuan CNY=CFXS opened at 6.9810 per dollar and was changing hands at 6.9829 at midday, 54 pips weaker than the previous late session close.

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