China Market surges 2.5%

The Mainland China equity market closed session higher on Friday, 21 September 2018, as investor sentiment buoyed growing hopes that policymakers will unveil more measures to offset the adverse impact of the trade war on economic growth, with everything from banks and brokerages to airlines and liquor makers climbing. At closing bell, the benchmark Shanghai Composite Index gained 2.5%, or 68.24 points, to 2,797.49, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 1.77%, or 25.09 points, to 1,445.11. The blue-chip CSI300 index added 3.03%, or 100.36 points, to 3,410.49. For the week, the Shanghai Composite Index added 4.3%.

Chinese investors brushed aside the tariffs on an additional US$200 billion of Chinese goods unveiled this week by Washington to focus on domestic policies. The administration of U.S. President Donald Trump announced Monday that it will impose a 10% tariff on $200 billion worth of Chinese imports from Sept. 24 and increase the rate to 25%, effective on Jan. 1 next year. In response, China said it will hit back with retaliatory duties of up to 10% on $60 billion worth of U.S. products.

The State Council promulgated guidelines on boosting consumption on Thursday night and the nation's top planning body pledged this week to put more investment projects in place. Premier Li Keqiang hinted taxes and social-security levies for companies could be lowered at the World Economic Forum in Tianjin on Thursday.

Shares of consumer-related companies and realty players inclined after the State Council's guidelines aim for consumption upgrade in areas of food and living. As per reports, Chinese government was working on detailed plans to cut taxes and to lift consumptions amid continued uncertainty over global trade. There was also speculation state-backed funds bought shares. Liquor distiller Jiangsu Yanghe Brewery Joint-Stock climbed 6.4% to 124.80 yuan and food seasoning maker Foshan Haitian Flavouring & Food gained 6.3% to 76.30 yuan. China Vanke jumped 7.5% to 25.80 yuan and Future Land Holdings added 5.6% to 28.50 yuan. Great Wall Motor surged 8.4% to 8.03 yuan and Chongqing Changan Automobile rose 7.9% to 7.35 yuan.

Jiangxi Ganfeng Lithium jumped by the 10% daily limit to 32.02 yuan after signing an agreement with Tesla to supply lithium products to the US maker of electric cars. Main rival Tianqi Lithium surged 7.8% to 39.27 yuan.

CURRENCY NEWS: China's yuan rose against the U.S. dollar on Friday, after firmer mid-point fixing by People Bank of China and the central bank's announcement that it will issue bills in Hong Kong, which could allow it to further manage the currency's moves in offshore trade. Prior to the market opening on Friday, the PBOC set the midpoint rate at 6.8357 per dollar, 173 pips or 0.25% firmer than the previous fix 6.853. In the spot market, the onshore yuan opened at 6.8356 per dollar and was changing hands at 6.8427, firer by 33 pips than the previous late session close. The offshore yuan was trading at 6.8344 per dollar

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