China Stocks end lower on softer PMI service growth data

The Mainland China share market closed down on Wednesday, 03 February 2021, as investors elected to book recent profit after private sector survey released today showed China's country's services sector grew at its slowest pace in nine months in January. Meanwhile, profit booking fueled further on caution ahead of the Lunar New Year holiday, which begins on Feb. 11.

At closing bell, the benchmark Shanghai Composite Index declined 0.46%, or 16.38 points, to 3,517.31. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.87%, or 20.86 points, to 2,380.79. The blue-chip CSI300 index fell 0.29%, or 15.89 points, to 5,485.20.

ECONOMIC NEWS: China Caixin Services Sector Decelerates In January- China services sector continued to expand in January with a services PMI Score of 52.0, the latest survey from Caixin showed on Wednesday. That's down from 56.3 in December, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. The rate of growth was the softest seen since the current period of expansion began last May, driven by slower rises in both manufacturing and services activity. Growth of composite new business also weakened during January. Though strong overall, the rate of expansion was the least marked for nine months, with both goods producers and service providers noting slower increases in sales. At the same time, employment at the composite level grew only slightly, with job creation at services firms offsetting cuts at manufacturers. The survey also showed that the composite index fell to 52.2 from 55.8 in December.

Stocks related to rare earth production rose after a military coup in Myanmar this week stoked concerns about a supply squeeze.. Shenghe Resources surged by the daily cap of 10%. China Northern Rare Earth soared 6.3%. China Minmetals Rare Earth advanced 5.1%.

CURRENCY NEWS: China's yuan was down against the dollar despite the central bank set a stronger midpoint, as state banks bought the greenback and yuan liquidity improved ahead of the Lunar New Year holiday. Before the market open, the People's Bank of China (PBOC) set midpoint of the yuan's daily trading band CNY=PBOC at 6.4669 per dollar, firmer than the previous fix of 6.4736. Spot yuan CNY=CFXS opened at 6.4545 per dollar and softened to 6.4596 at midday, 30 pips weaker than Tuesday's late session close.

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