China Stocks end lower on profit booking

Headline indices of the Mainland China equity market ended softer on Friday, 27 July 2018, as investors continued withdrawing profit off the table after a strong rally early this week on Beijing's stimulus plan and ahead to interim corporate earnings results due out in coming weeks. Profit booking resumed amid revival of the Sino-U.S. trade friction after United States signalled on Thursday it is set to push ahead on trade talks with Canada and Mexico after agreeing to suspend hostilities over tariffs with Europe in a fragile deal that may clear the way for renewed pressure on China. At the close, the benchmark Shanghai Composite Index declined 0.3%, or 8.63 points, to 2,873.59, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.66% or 10.65 points, to 1,599.08. The blue-chip CSI300 index dropped 0.42%, or 15.02 points, to 3,521.23. For the week, Shanghai Composite Index was up 1.6 percent, while CSI300 index gained 0.8 percent.

FROM THE PRESS: China June IP Slowed -- Profit growth of Chinese industrial companies softened in June as the monthly rise in input prices outpaced that of output prices to push up production costs, the National Bureau of Statistics (NBS) showed Friday. Companies included in the NBS study had over CNY20 million in annual revenue from their main business activities. Industrial profits for June rose by 20.0% y/y to CNY658.29 billion, following the rapid growth rate of 21.1% y/y in May. Price changes dragged up profits by 0.3 percentage points from the previous month, compared with a 4.3 percentage points contribution in May. Combined profits made by China's industrial companies in January-June rose 17.2% from a year ago to CNY3.39 trillion. That compared with an increase of 16.5% y/y in Jan-May, and was the highest increase so far in 2018. The NBS attributed the growth to lower production costs and better operating efficiency.

Shanghai cuts official spending-- Shanghai recorded 162 million yuan (US$23.9 million), 13 million yuan less than the budget, last year in the institutional spending involving business travel and cars, figures released yesterday showed. The Shanghai Finance Bureau released the city's financial settlement for full-year 2017 and the budget implementation for the first half of 2018.

CURRENCY NEWS: Chinese yuan fell against greenback on Friday, after softer mid-point fixing by central bank. The People's Bank of China (PBOC) set official yuan midpoint at 6.7942, weakened 280 basis points than the previous fix of 6.7662 on Thursday.

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